I moved you to the Newbie board
Hosting, I've been with M3 Server for a number of years and I'm very happy with them. Choose hosting from my sig and it will take you to their dedicated page.
As far as AVS services I can't really be much help as after the shake up this year with them there are non that I would recommend.
Free sites make great feeder sites. Twenty sample pics and up to three ads per page on a total of four pages will get you lots of traffic to your paysite.