Free isn't really free. Someone, somewhere is paying for it. NPR interviews Big Fish games, and Squarespace on the merits, and pitfalls, of giving your product away for nothing. Squarespace is bucking the trend by actually charging for their online publishing software. The payoff comes back tenfold to we, the paying customers, in the form of a product that soars above the competition.
It's a short story, and worth listening to if you're interested.