If Ruby has not heard of MSN Spaces, then s/he needs to “get out more”.
I learned about it by simply keeping up on the news (tech news to be specific), which is extremely easy to do here on the Internets®
As far as MSN having a negative effect on LiveJournal, I'm sure it has, but too many people on LJ are too “cool” to flock to a Microsoft-run site.
I don't think SixApart has that much to worry about.
I do admit msn spaces has some nice features. For one, they do have the ever-popular blogrolls, which LJ has yet to implement.