#1 Free software is Illegal
This is easily the most common phrase I hear when recommending free software to new people. (Not just the un-educated make this mistake either, one of my college professors made this assumption when I brought up the topic in class) Let me assure you that free software is 100% legal, you are not breaking any laws by downloading and using it. Most free software is typically released under the GNU license or some similar license.
#2 You get what you pay for
This idea is simply not always true in the case of software. Don't believe me? Go give OpenOffice a download or maybe play around with image editing in Gimp for a short while. These are by no means "low quality" or "cheap" software simply because they are free of charge. Now, I am by no means saying that all FOSS programs are of this same quality - but then not all software that you have pay for is all that fantastic either.
#3 Free Software is harder to Use
Nine times out of ten someone who is telling you this simply is not familiar with what ever piece of free software they are complaining about. What they mean to say is "this program has a different user interface I have to adjust too", which they in turn interpret as the software being difficult to use. This is a fact of life though, all GUIs take some getting used to - you didn't know where all the functions were in Microsoft Office the first time you sat down to use it either.
#4 Free Software is Insecure or Buggy
No piece of software is perfect, free or otherwise. That being said, a piece of matured free software (version > 1.0) is typically more stable and secure than a piece of closed source software. Why is this? Think of it this way, a piece of closed source software has a team (often times a small one) that works on it - no one else. This means there are a limited number of people that can search for errors and correct them in the code, meaning when there are bugs discovered it also typically takes slightly longer to get them resolved. A piece of open source software on the other hand has the code available for anyone who wants to improve and edit it. This means there can be hundreds (or in some cases thousands) of programmers pouring over the code, searching for (and fixing) bugs and security holes.
#5 No One uses Free Software
Well that is just wrong. Beyond just Linux however there are countless (Really, we cannot count them. With free software a single download can account for hundreds of installations.) businesses and individuals who have been moving over to using free software both for economic and stability reasons.
#6 "Free" Software simply means Free of Charge
Yes, free software is free of charge. However there is more to it than that. Truly free software means that it is "open source". I touched on this briefly in the third point, "open source" means the code that allows the program to run is available for anyone to take, edit, and learn from as they please. While freeware is nice, it is nowhere near as powerful as FOSS and the two should not be confused.
Is free software the right choice for you? That is your decision! Interested in finding out what kind of free software is out there and what it can do? Then check out http://osalt.com/ - it is one of the best sources on the web for finding free software alternatives to commercial software.