Anything free in the atoms economy (traditional economy) must be paid for by something else, which is why so much traditional free feels like bait and switch--it's you paying, one way or another. But free in the bits economy (online) can be really free, with money often taken out of the equation altogether. People are rightly suspicious of free in the atoms economy, and rightly trusting of free in the bits economy. Intuitively, they understand the difference between the two, and why free works so well online.
Today the online world is a country-sized economy built of free. The most interesting business models are in finding ways to make money around free. Sooner or later every company is going to have to figure out how to use free or compete with free, one way or another.