Sometimes I’ll see this phrase on Slashdot. I know what they mean by it. If I give you a beer and don’t ask for anything in return then I have given you a “free” beer. The implication is, however, that this is in opposition to some other usage of the word free.
What other kind of free is there?
Crikey, you can find anything on Wikipedia: http://en.wikipedia.org/wiki/Free_as_in_beer
“Free as in speech”
Gah!
And I’d like to point out, apropros of nothing, that GorillaMan wouldn’t have beaten me with his (far better) cite if the board hadn’t made me wait 30seconds before posting…
mutter mutter grumble grumble
Pish-posh - it made me wait a full minute 
Oddly, the Wikipedia link doesn’t work for me. It’s apparently timing out, probably meaning downtime at their end. Too bad.
Anyway, geeks who think the “free as in speech” and “free as in beer” phrases are unwieldy have coined/appropriated the terms “libre” and “gratis”, respectively. (That is, “libre” (think “liberated”) means “free as in speech”, and “gratis” (an actual, if little-used, English word) means “free as in beer”.) Granted, these aren’t as common, but they look better in formal papers and other reasonably stuffy contexts. 
And the typical context for this distinction is software licensing. A Linux distribution, for instance, might not be free-as-in-beer. Often, you’ll send the company distributing it $5 or whatever for the installation CDs and possibly a manual. But most Linux distros are free-as-in-speech, meaning that you’re allowed to burn a copy of it yourself and give it to a friend, or modify the source code, or even modify the source code and charge others a fee for distributing burned CDs to them, without involving the original owner.
Lots of languages don’t have the problem with “free” that we do in English. I’m guessing we get “free” from German “frei” which is used as in English. But most romance languages have two distict words for the vastly different meanings of “free” – and these are they, from Latin.
“Gratis” is an English word, meaning free (as in beer). Libre hasn’t formally made its way into most English dictionaries, but anyone that knows English (I don’t mean just how to speak it) can pretty much tell what it means anyway.
The one time I’ve heard the phrase (prior to this thread), a friend of mine designed my webpage for me–when I asked what the charge would be, he said “free, as in beer” which I took to mean “no formal charge, just buy me a brew some time” which I happily did.
On the other hand, “freeware” is typically free-as-in-beer but not free-as-in-speech. You can download it and use it without paying any money, but you don’t get the source code, you can’t redistribute it, you can’t modify or reverse engineer it, etc.
That was “Free; as in [buy me a] beer.”
This is “Free as in beer.”
Two different things.