Hmm.. in regards to free web hosting, do you mind a place with ads? bravenet.com is not bad, they do have ads though (lol, i'm with them using their premium plan, no ads =P)
About google ads, yes, it is free to sign up and yes, you get money every time someone clicks on an ad, in fact I have google ads on my site, known as "AdSense", and so far I've gotten anywhere from 3 cents to 7 cents a click. Doesn't seem like much, but if you have a high traffic site, you could make decent money.