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[admin update 2013-10-28: see the wiki section on email/smtp]

Can I send email and recieve too would an smtp server setup ?

As far as I'm aware from a free account you can send email via Google's SMTP server smtp.gmail.com, see this thread for more discussion and this thread has some configuration you might find useful. Note that the latter thread talks about using Google Apps but Google have discontinued this as a free service for new users - however, sending from a standard Gmail account should still work. Note that paid accounts have unrestricted access to connect out, so you would be able to use any SMTP server you choose (i.e. you could use different email accounts than Google's).

In terms of receiving email, you can't run a mail server on PA with either a free or paid account because there's currently no ability to listen for connections - web applications are a special case and they're handled differently (and can only listen on port 80 and 443). An SMTP server needs to listen on port 25 to be effective as it has to accept connections from clients and other SMTP servers. See this thread for a similar request.

Of course, if you don't mind a delay in handling emails then you could perhaps let something like Gmail receive your emails and run a scheduled script that downloads and processes them - I'm not sure of the details of what APIs Google provide for this, however, so you'd need to check that yourself first. Also be aware that free accounts can only run scheduled tasks once a day - paid accounts can run tasks hourly.

@Cartroo -- thanks, that's a great summary!

@MyBlog -- let us know if there's anything else you need to know.