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No problem for me if handled properly
I would have no problem with discrete, tastefully handled ads. I imagine it being like Google text ads, set between chapters and at the end of a book.
I see this as a reasonable compromise: It enables authors to supplement their income (so they can afford to keep on writing) while not being too disruptive to the flow of the story (since you can just skip over them) and not bastardizing the story content through things like in-story product placement.
It's easy enough for a disinterested reader to skip over while the ads can be highly targeted to meet the interests of a typical reader (if the publisher and advertisers are doing their homework).
Animation, sound, flash, etc are all a big thumbs-down--not to mention that simple text ads work really well if implemented properly.
EXAMPLE:
(lots of mindless action, a moment of romance, an amusing one-liner leads to the chapter ending of...)
and then the world exploded--
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ADVERTISING
OUR SPONSORS ENABLE US TO OFFER THIS EBOOK AT AN AFFORDABLE PRICE:
text ad
text ad
text ad
END ADVERTISING
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Chapter 6: After the World Explodes
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