Free books are alway good, but peruse the kindle store for the free books & it's either books that are project Gutenberg-esq or books that you don't even want to read. You have to hunt for the diamond in the rough. But with a large publisher releasing a free book like this- people's attention is piqued and the publisher now has the reader's attention. When you just google "oreilly iBooks" the first link is the one posted on the blog. You have the option to add the book to your cart at a price of $0.00. Nifty. But if you peruse the page some more there are other links to books at the bottom that aren't free. So minimally, O'Reilly is going to benefit from the web traffic.
The "gift economy" seems sustainable... but I can't lie, I'm waiting for the catch. We watch TV shows for free on hulu, but we sit through several minutes of ads throughout the episode. Are we going to have ads in our books to pay for the publishing & manufacturing fees? I have the cheapest kindle (which I love dearly), but there's ads on the lock screen, you have to pay to upgrade away from them.
Overall, free books rock. I used my library card this summer to read for free on my kindle. Though I didn't get through the bestsellers of the summer, I did get to read and re-read a lot of older books that I might not have picked up otherwise (Slaughterhouse Five, Into the Wild, Catcher in the Rye etc). But I did read the last Tucker Max book because he released it for free on the amazon book store. So free books are enticing, they bring the reader to the publisher's website, generating web traffic. They also create exposure for the authors themselves. But there's always a catch, just waiting on this one to sneak up on us.