I stumbled across some interesting posts made by authors who have given away free digital copies of their work.  Although both of these posts are about a year old they both offer interesting insights from the perspective of an author about how free digital book distribution affects sales. Many of the comments are insightful too.

http://whatever.scalzi.com/2008/02/28/some-stats-post-free-ebook/

http://stevenpoole.net/blog/trigger-happier/ and

http://stevenpoole.net/blog/free-your-mind/

I’m currently researching the short – term sales effect of releasing a free digital version of a book and hope to share Bookscan data shortly on the books discussed in the above sites.