I host my websites at 1and1.com They are offering free setup, hosting for 3 years (ends 1/14/04), no banner ads, etc. I found them in Wired mag. They are breaking into the USA market and offering all this till January I think. You can register a domain with them for $5.95 a year. You get 500 meg of space and 5000 meg of transfer a month. You can even have your own email at your own domain.
Goto http://order.1and1.com/xml/static/HostingProfessional to see all the features.

I do not get anything for people signing up, but it is a lot better that the other free place out there...

Ian