I only recently created the account though when I bought my windowsphone, like a few weeks ago. Why would it let me make a new account on the .live address which is outdated? I don't want to reset my windows phone to factory settings but I also don't think it's a good idea to keep an outdated email ending.
It's up to you. I really do not care about the ending of the email address, but that's just me.
I used to have AT&T as my ISP, and my email address ended in @sbcglobal.net since it was SBC, not AT&T when I signed up for service. I did change it to @att.net.
On the other hand, one of my friends had AT&T as his ISP long before I did. His email address ended in @att.net. In the time period he's had AT&T, he would have needed to change to @ameritech.net, @sbcglobal.net and back to @att.net if he wanted to keep the ending of the email address "current". That just would have confused all his contacts. As it turned out, he never changed it, and what is current now was what was current years back.
I now prefer not changing my email address, since I'd rather not have to deal with the hassle of my contacts needing to update their address books.