As you know, Microsoft is gently nudging users to migrate away from public folders and onto SharePoint document libraries and lists.  In the initial release of Exchange Server 2007, there wasn’t even a GUI interface to manage public folders, although this was added in Exchange 2007 SP1.  It is fairly easy to configure SharePoint to accept incoming email for document libraries and lists.  Once a document library or list is configured to accept incoming email, you can send messages to the Document library or list just like a public folder. 

If your message has an attachment, the attachment will also be saved in the document library, however the attachment and email message (if you’ve configured the document library to save your email messages) will appear as two separate entries in the document library.  If you’re currently using public folders to track message threads, consider enabling inbound email for a Discussion Board Web Part, which is probably the closest match for this type of use of a public folder.   Here are the high-level steps to configure incoming email for your Document Library or List:
1. Install SMTP on the SharePoint front-end server.
2. Configure Active Directory (AD) for SharePoint Contacts.
3. Configure Inbound Email Settings using SharePoint Central Administration.
4. Configure a document library to accept incoming email.
5. Test.

Install SMTP on the SharePoint Front-End Server
If you want to enable inbound email on SharePoint, verify that the SMTP Service is installed on the SharePoint front-end server.  Complete the following steps to install SMTP on the SharePoint Server.
1. Click Start, Settings, Control Panel, Add/Remove Programs.
2. Click Add/Remove Windows Components.
3. Click the Application Server, Details button.
4. Click Internet Information Server (IIS), Details button
5. Select the SMTP Service check box and click OK. 

Alternately you can specify an email drop folder that's on a different server or share, however Microsoft doesn't recommend doing this, because there is no way for the SharePoint server to detect if the drop location has changed. 

Configure Active Directory for SharePoint Contacts
You can configure SharePoint to automatically update contact information, groups and distribution lists in AD.  To segregate out these SharePoint-generated Active Directory Objects, I suggest you create a separate organizational unit (OU) in AD.  In this example, I created an OU called SharePoint that is placed off of the root container in AD.

Configure Inbound Email Settings Using SharePoint Central Administration
Complete the following steps to enable incoming email on SharePoint.

1. Start SharePoint Central Administration on the SharePoint server.
2. Click the Operations tab, Incoming e-mail Settings.
a. Select Yes to enable incoming mail.
b. Select Automatic for the Settings mode.
c. Select Yes to use SharePoint Directory Management.
d. Specify the location of the SharePoint OU in AD.  If you created a SharePoint OU off of the root the entry would be OU=SharePoint, DC=<domain_name>, DC=com.
e. Specify the fully qualified name of the SharePoint server that will accept incoming email.
f. Select Yes (highly recommended), to only accept messages from authenticated users.
g. Select Yes, (recommended) to allow creation of Distribution Groups from SharePoint.
h. Optionally check approval requests for New distribution group, Change distribution group e-mail address, Change distribution group title and description, and Delete distribution group.
i. Enter the email display address.
j. Safe Email Servers.  I suggest specifying which servers your Sharepoint Server will receive mail from, otherwise you may receive a lot of Spam into your document library.

After you have configured your Sharepoint Server to accept incoming mail, you must configure a document library or list to accept incoming mail.  Complete the following steps to allow a document library or list to accept email.

1. Navigate to the desired document library or list and click Settings, Document Library Settings, and Incoming E-mail Settings.
2. Select Yes to allow the Document Library to receive e-mail.
3. Assign an email address to the document library.
4. Select an Option for Attachments.  You can save attachments in the root folder, in a sub-folder grouped by email subject, or a sub-folder grouped by sender.
5. Select an option to overwrite files with the same name.
6. Select an option to save the original email.  If you select Yes, and you send a message with an attachment, the message and the document will be stored as two separate items in the document library.  I suggest initially selecting Yes for this option until you verify that the document library is properly accepting emails.
7. Select an option to save meeting invitations.
8. Select an Email security policy to accept messages based on document library permissions (recommended) or to accept messages from any sender.

After you configure the document library, start Active Directory Users and Computers on a domain controller (DC).  If you’ve configured your SharePoint Active Directory Management properly you should see Contact in the SharePoint OU that has the Document Library Address.  However, you may notice that it does not have the same email address domain that you specified when you set up the email address for the Document library.  It probably will have an address in the format of <document_library_email_address>@<fully_ qualified_name_of_your_SharePoint_Server>.   You can use this address, but if you want to have the address with your standard domain name and not the name of your SharePoint server, you can add in an additional email address for the document library if you are running Exchange.  Start the Exchange Management Console and navigate the SharePoint Contact object and add the desired email address for the document library.  After you’ve configured the document library, send an email message with a test attachment and verify that it was properly received into the document library.  It can take a few minutes for the email message to appear in the document library.

Tip

After you configure a document library to receive email, any attachments in the message may not be stored in the document library, although the message does appear in the document library.  If you run into this problem follow the instructions in http://support.microsoft.com/kb/926891 to solve the issue.