i had more problems with my hosting companies going down to tell you the truth than blogger .
search engines treat them like any other site , and to tell you frankly im having more succes with my free blogs than my 4 other sites that are collecting dust in space .
people dont care whether its hosted for free or not , its the traffic that counts - traffic = $$$$$$$$$$$$$ , and you can always redirect the traffic to your main site .
i have one major source of income because i really dont like affiliate programs , i find them risky ,i have hardly no affiliates on this blog , i like adsense because its security for me and its very steady .
But this does not mean that the person who buys the blog cant experiment and monetize it his own way .
The problem with affiliate programs is that one day you can make $100 and the next day you can make $0 , unless you have really major traffic
on the other hand i find adsense very steady . ( my opinion )