I myself feel both models are best, make one version, with ads that doesnt include everything the paid game will have, just dont hamper the free one too much, people hate to feel cheated, even if the game is free.
All that being said, more ad support for various ad agencies would be a big plus.
And there's always the crazy assed idea, to make the next big hit like Angry Birds in AppGameKit , make millions off of licensing rights, get a million dollar home, a hot girl friend/wife, and a giant pool, we can all dream!
Peace out programmers/users.
I fight for the users!
It's Bird! , It's Plane!, No its a rocket powered Squirrel holding some acorns and a smile!