An article in the latest edition of Forbes written by science fiction writer and Boing Boing blogger Cory Doctorow about how he has benefited from "giving away" his novels online. He makes the fundamentally sound point that in terms of sales of a print version (for which his publisher does charge for) if a free online version drives more sales than sales lost from people who actually would have bought the print version, than he's better off. Doctorow, I think smartly, recognizes that there is a percentage of people who download the online version but would not have bought the print version in any event.
Of course, Doctorow has a pretty big platform at Boing Boing to talk about his books. I don't know how effective his strategy would be for someone without a similar significant online presence.
There are several other articles at Forbers on the future of books that may be of interest – links to them are here.