Yes, people use free E-mail (gmail), or free Hosting services like blogging under a subdomain (blogger.com).
But when you want to be in control, you just buy your own domain.
The gTLDs are regulated. So you know that verisign will be allowed to increase their fees by 7% almost every year. But that's it.
Private TLDs are not subject to those regulations. In fact they could even take them away from you. You are at the mercy of the registry/provider because you don't hold title over the domain.
And any free service is bound to come to an end at some point.
(Reminds me of another.com when they put an abrupt end to their free vanity E-mail service)
A TLD needs development in order to gain recognition and thrive. Giving them for free, even handing them out like candy is not going to foster the development needed.
The problem with free domains like the .co.cc or .tk is that they are geared at non-professional use. Since they are free you get a lot of junk and little notable development. Also, individuals do not have the resources of corporations so they are not going to 'enhance' the namespace with their low key websites. It's normal, people are more careful and respectful with the things they paid for, than those they got for free...
Free sounds like a smart idea, but isn't. Even cheap prices can hurt: look at .info.
I think there is too much noise about new extensions, the real potential lies in the ccTLDs.