If I were gonna have free sites
 

... for my affiliate program, would I be wise to:

build some and host them for affiliates to post

build some and try to post them myself

let free site webmasters build them, and offer hosting

I want a program that suits the partners doing free sites. I personally have no knowledge of how these sites work, or need how they need to be built to be very effective.
any opinion or info will be appreciated

I am assuming you have a content sponsor site? IF so, I would say go with the first two options, but the last one would be an issue for most webmasters because if they build gallery sites in exchange for hosting, most Link Sites do not accept free hosted sites to be submitted (or hosting from sponsors even). There wouldbe a few who don't care, but this is a small number.

I'm writing up a tutorial on Gallery sites with many options for those who make these and hope to have it on my directory by this weekend. I'm also setting up a design service as well which involves gallery sites (and other things). Anyways, if you need any help, just post it here or PM me. I am sure others here will also give some good advice as well on this.

I would be curious to see what site yo have though that this is in regards too...

Like NetGoonie said go for option 1 and 2.
Option 3 is defenitely a no.

If you don't have any knowledge on how hosted free sites work you've come to the right place here, feel free to ask away :)

What you can do for starters is check out other affilte programs that offer Hosted Free Sites and see how they handle it. The perfect place to start is Chop's http://www.hfslinks.com, here you'll find almost all free sites ever build by 80+ affiliate programs.