Free antivirus software usually provides a bare minimum level of protection. It will scan for malware, and often can perform automatic scans, too. Some free apps may have additional protection tools such as a browser add-on that checks for bad links. But such features are usually limited to paid antivirus products. Some free apps offer behavioural malware detection, which finds malware based on how it acts on your PC--a good way of detecting brand-new malware outbreaks. (Behavioural detection is standard on paid products.)
Paid antivirus straddles a middle ground between the basic freebies and the feature-packed security suites: They typically offer more comprehensive security tools (such as parental controls and identity theft protection) and more flexibility than a free antivirus package, but they have fewer additional features than suites, which are intended to be one-stop security shops.
One of the biggest drawbacks to going with a free product is the lack of technical support. While most companies offer some sort of phone support for paying customers, free antivirus users usually must fend for themselves. Avast does offer e-mail support for its free customers; most others provide only a knowledge base or forum where users can go for help. Another trade off is that free antivirus products often have some sort of advertisement for the company's paid product. Avast Free Antivirus has an upgrade link in the upper-right corner of the main window, and Avira AntiVir Personal will display an ad for Avira's paid antivirus software.
How about malware signature updates? The security software companies Mediati spoke to told him that they treat their free and paid products the same as far as signature updates are concerned, although there may be some under-the-hood differences between their free and paid products (as is the case with Panda's software, for example). And one company, Avast, says that its free product is intended for average users, and that its paid...