But your experience may not be common to many other businesses. If free users aren't contributing to the product other than marketing, it would come down to a decision of whether or not that goodwill was worth the added cost. It can be hard to measure that cost, but perhaps Twitter Analytics and web referrers can provide an idea.
Chargify is a great example, as are others that have startup/education plans. The point is that if you want to have free as an option, you should own it and promote it and make it work for you. Having a free option as a subtitle is simply a dumb idea. If you want to charge people, charge them. Don't be half-arsed about it. Having a free plan because you're not sure people will pay is the fastest way to find the unemployment queue.
Most importantly, if you have a free plan, there should be a REASON for having that free plan. Having a free plan is sensible when there is a natural progression to a paid plan (e.g. Chargify), there is benefit to your business by fostering a community (e.g. UsabilityHub) or there is potential to make use of micro-transactions (e.g. Xbox Live). The point is, that there are plenty of options to be explored by all businesses, not just those that leverage the input of the community like we do.
