It depends, there are free apps, and free with limitations. Generally speaking a free with limitations means that a customer will eventually purchase the paid version if the feature they really want isn't in the free version. However, there are free apps which have in-app purchases, most commonly video games. In-app purchases generate quite a bit of funds and are a more long term means of revenue generation if you can keep expanding the content of the app, due to the fact that as the user continues using the app, or playing the game, they'll be more ilkely to continue spending money on in-app purchases and possibly even exceeding the revenue generated by a single sale of a paid app.
