I have read a lot of articles about how Microsoft will give away Windows 7 do make up for the fact that Windows Vista was so bad (which is un true) see : Windows 7: Why Microsoft Should Give Windows 7 Away
But there is no way this will happen and the proof is this tomshardware article http://www.tomshardware.com/news/windows-7-basic-business-ultimate,6910.html
Why would Microsoft have different flavours of the OS all with different features if they all were all free. Surely they would only have on version of the OS if it was going to be free and then people would just use the features they want.
UPDATE: After some more thought i think this might mean that MS are going to give away the Windows 7 Starter edition for free. This version is what used to be install on computers in emerging markets and is limited to running 3 applications at once so i think this would be the ideal version to give away and entice people to upgrade to a better version for a cost.