By now you all have heard about David Hobby's recent post "Four Reason to Consider Working for Free". What David is proposing is not new, many well know photographers grew their careers by doing free work.
Many other blogger have weighed in on David post and I would recommend reading all of them. Chase Jarvis, Moose Petterson and Vincent Laforet. After reading all of these posts, I would have to say that I most closely align myself with Vincent's point of view.
There is a balance that needs to be struck... Read them all for yourself.