There have been rumours about Project Titan since around February 2010, but today Facebook have unveiled their own email system which according to TechCrunch they have spoken of internally as being a Gmail killer. Now I'm sure Facebook would like to think they can beat Gmail, but even with the saturation of their current user base they may struggle to compete considering many people who have a Google Accounts email for work are likely to have at least one Gmail account for personal use as well. Also, it would have to have some pretty killer features in order to beat what Gmail provides.
Mark Zuckerberg at a press conference in San Francisco has spoken of how it provides seamless integration across all the different ways people communicate". What he tried to make clear was that this was not an email service, at least not an ordinary one at any rate. What this does is it links Facebook chat, social events from your timeline, and text messages in one interface. All people who use this service will be able to get their own @facebook.com email addresses. He also made a point of saying that this service is not an email killer (obviously referring to previous comments regarding Gmail) as email is only part of the service.
We are also providing an @facebook.com email address to every person on Facebook who wants one. Now people can share with friends over email, whether they're on Facebook or not. To be clear, Messages is not email. There are no subject lines, no cc, no bcc, and you can send a message by hitting the Enter key. We modeled it more closely to chat and reduced the number of things you need to do to send a message. We wanted to make this more like a conversation.
So what this basically means is that it's not email, it's actually just a form of offline messaging similar to what is available with most IM mediums.
Many people on Twitter have commented that they would not trust Facebook with their email, and I do understand where these concerns are coming from. Considering Facebook's history of having serious privacy issues it's fair to assume that these concerns are also going to expand into this new service. This being said, I think I will at least try out this new service when it is launched.