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They do. But, there is a huge advantage to doing so - Smashwords will then maintain the book in your library, even if the author pulls it from the store later on (has happened to at least one of my books, as the author received a contract and pulled them from there and the Kindle store). Also, once purchased, you can access the book for any format or updates, no matter what the author does to pricing; for a "free" book, if the author later adds a price, you can't redownload it, as you don't "own" it, even if you did "add it to your library", that doesn't make it yours.
I MUCH prefer either Set Your Own pricing or a coupon, rather than having the book just be "free".
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