Well, let's start with getting the terminology correct - it's Hosted Free Sites (HFS) not Free Hosted Sites
A Free Site, in it's most basic form, is a warning page, followed by a main page that links to 2 galery pages of 10 pcis each.
The pages should have a "flow" to them - same colors, fonts, etc. Nothing look uglier than a Free Site with 4 different colored pages
I don't think graphics are all that important, but then again I suck at graphics so I have to rely on my (somewhat limited) marketing skills using text to sell the surfer on at the very least, clicking on the ad.
I tend to use whatever the sponsor gives me as far as banners/ads, trying to work what they have into my templates.
Templates are a big thing - if you use too few, the sites will become old & my thinking is that the surfer will become confused, thinking they have alreadyseen the site that they are on. So we tend to tell people to spice things up using a variety of different templates - and not "site templates" - I have 29 warning page templates, 14 main page templates & 27 gallery page templates. Way back when, I started by using #1 for each, but eventually I got to a system where the next one I build, I'll be using warning page #12, main page template # 6 & gallery page template #23 - this way, each Free Site has a different set up & I'm not just using the same 30 "site templates" over 7 over & over. So that should be a goal of yours (or any Free Site builder - variety)
I have this feeling that I'm rambling