Ad-supported software has been around for ages. I remember using one of the first free Internet email services called Juno.com that used toll free numbers for dial-up email access. This was back before the World Wide Web was even known to most people and BBS (Bulletin Board Systems) were about all anyone used their modem for, besides faxing. Nowadays, most sites offer up free content for users by inundating them with advertisements and even employ scripting to tailor ads based on search results, location information, and so on.
A new trend that may be coming around is the idea of ad-supported hardware. A good example of this would be Amazon's latest model Kindle, which sells for $25 less than the regular Kindle price because it displays advertisements. Otherwise, it has all the same features and hardware specs, so it's technically the same device but with slightly different software. The advertisements only display on the main screen and won't interrupt your reading at all, so they are hardly obtrusive.
Amazon's introduction of this ad-supported Kindle actually went over well with customers. With the discount, which really isn't enough in my opinion, more new Kindle buyers opted for the $114 model. It's currently the #1 bestselling item in the Electronics category on Amazon.com. The $139 model without ads is number two.
Just to compare, I did a poll of some friends on Facebook and the general consensus among my friends was that they would rather pay not to have to watch any ads. I happen to agree with them. It's the same reason why I subscribe to Netflix instead of cable or satellite TV.