Yahoo! Mail's recent changes have been a bit balls, but I haven't required a special character and I already use capital letters and numbers in my passwords by default, so I'm okay there. I'm luckily pretty good for remember passwords for the most part.
I agree the security questions are dumb as hell and this is a fairly internet-wide problem. I love it when they have custom questions allowed (and now that I think about it, I'm sure I have a custom question on my one) because I can put completely non-questions into the security question, like my current one of choice is simply *cough* which is not a question but a key word I would use with a certain person a long, long, long time ago and the password is a fairly unrelated but still easily remembered word associated with that person. Essentially it's pretty much unguessable without being me or doing some serious hacking.
I don't like Hotmail or Gmail, so I've stuck with Y!Mail through good times and bad. It's not as bad as the system they almost forced me to use, but it's still not as good as the old Y!Mail Classic which was just perfect (internet change is the worst). It has a few great things in it, though, like the 'Recent' bit which covers recent emails you've opened and whatnot. Beyond that, the bigges bonus of Y!Mail is that it's the one account I've used since 1997 and that means it has a massive archive of emails that I don't have to lose, and also people who haven't known me since high school have contacted me from time to time after they found my email in the yearbook which I found rather amusing.