This whole free meme is pretty hackneyed and sooooo "three weeks ago" but given some recent experiences, I thought I would share some perspective.
When there is scarcity, Free is a blessing.
It's 1999, you're in college and you want music. You're tight on cash and you want an mp3, so you hop onto Napster. Sure, the first three files you downloaded sounded horrible, but the fourth was the perfect rip. You waded through the junk to get to gold. Because there was a scarcity.
When there is perceived freedom, Free is an expectation.
We expect pretty much all of our online content to be Free, especially text content. A couple of years ago, we laughed at the Wall Street Journal for maintaining their subscription model, even (shudder) online. We lived in the age of freedom, and equated free expression and virtually free distribution with free content. I'm still not convinced a production model to create great content exists in the truly Free model, but time will tell.
When there is something on the line, Free is a burden.
When your client wants to launch on Twitter and there is a hiccup in the system, there is no number to call. When you are using GMail for your small business and the mail goes down, there is nothing you can do. When you are counting on a buddy to fix your car and the fix doesn't quite work as promised, there is nothing you can do.
Free is great. Free is relatively democratized. Free is nice to have. But if you are doing anything of importance, don't count on free.
Just because it's there, doesn't mean it's right for every occasion. If the right choice is Free, proceed strategically and with caution. You rarely own or control Free. More often than not, Free is a borrowed platform. Plan accordingly.