Remember, though, GMail was originally announced one year ago today. At that time, everyone thought 1GB per user was an April Fool's joke, said it couldn't be done. Now everyone is matching it. Google does have some other good April Fools' jokes up today though.
In a way, they are overselling, just like banks "overlend" their money supply. If all depositors came at once to withdraw all their funds, the bank couldn't possibly handle it (see "It's a Wonderful Life" for Jimmy Stewart's explanation). In the same way, I'm sure Google doesn't have 1GB (or 2GB) of actual available space online for each GMail user. At the same time, with the prices of high-density storage and with modern compression techniques, it wouldn't be impossible.