Baen is obviously benefiting from it, and the few who go out of their way to get the freebies in perpetuity probably don't bother them as much.
I must have downloaded a good 50-60 free library books and then bought others of my husband's favourites. Promotion is good.
I hear the "you can afford a (computer/e-reader/mp3 player/stereo) etc" argument before.
My original motivation for buying an e-reader (which took a while to save for) was pretty much to be able to carry Project Gutenberg's bibliography in my pocket.
I bought a stereo so that I could listen to the radio station with huge speakers. Buying the initial investment doesn't mean you now are chained to handing your wallet over every time you open your ears or eyes