I have the free Scrabble downloaded. Yes, it's free, but as two of my lovelies were playing "Pass & Play" (where you share the device, you just pass it back and forth when your turn is over), I noticed that there was an ad every few turns. It was a stupid 30-second ad, but in my opinion, that's totally annoying. I think it's totally worth the $1.99 for the full app where you don't have to worry about ads in the game!
That goes for several of the games for the iPod and iPad. My advice? If it's less than $2, spring for it. It's worth it.
How do we broke-as-all-get-out teachers pay for apps? I just put iTunes gift cards on my Wish List. It goes out on my classroom blog every so often for parents, and they never let me down! When they know I am buying good word game apps to help engage their kids in learning, parents are happy to provide. Just don't be afraid to ask!
Now, I will say that some free games are ad-free, so the bottom line is this: be sure to check the comments in the App Store before you buy!