The main reason free sites get ignored is not completely because it's on a free provider. Let's face it... if you can get enough quality backlinks and make the site popular then I'm sure you can get traffic. The problem is most people that start off with free providers aren't serious and don't maintain their site so it never gets noticed. But I still have a gut feeling that the search engines look down on free hosts in some way.
Just my opinion. I could be wrong though.
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