Just had one of those "Email can't be delivered" messages with the reason "Recipient over quota"; said recipient is on Freeserve, what sort of quota do they get with that lot? I'd be inclined to change.
Got a similar "over quota" message back from someone on the same account type a couple of weeks ago. I made alt. contact and they say "no problems with their inbox" so assume they've just got a really basic E-Mail set-up or summit. Who knows.