I love the concept of free books - I practically live at my library. If I had had to buy every book I'd ever read, I'd owe more money than Northern Rock right now.
Sites offering payment-free stories and books are just the current generation's answer to libraries. I don't believe they will ever take away a person's desire to own a physical copy of a book - there is something rather wonderful about packing away in your suitcase that motheaten, dogeared copy you must have read a thousand times, safe in the knowledge when you return it will be a thousand-and-one. It's also a bit uncomfortable taking your laptop to bed for a bit of late night reading.
You may not like every author of every free story, book or excerpt you ever read, but there will be some who read them who would not otherwise have had the opportunity, who fall in love with the characters and become dedicated fans.
I found the Dresden books thanks to my local library, and have gone on to buy the whole series despite having already read most of them for free.
Personally, I find reading short stories on the internet easier than trying to read books but that's probably down to the time I spend doing other things on my computer.