Recently there have been stories that Google is blocking free hosted websites. The problem with these claims is that they are exceptionally believable. Many free hosted sites are spam.

Google Guy stated "Looks like some redirects on their site interacted badly with us trying to choose a canonical site between www.angelfire.com and www.angelfire.lycos.com." http://www.webmasterworld.com/forum3/21616.htm

The real cost of free hosting is not one time errors like this, but the more long term marketing effects. It is harder to get people to link to a free hosted site than it is to get links to a paid hosted site. I wrote a small article called "The Cost of Free Hosting."