The latest experiment in E-Books has the reader selecting the quantity of advertising in a book as it is printed by a POD device. You can read about it here, at Joe Wikert's blog. He has a link to more info on the subject.
This might take off fast as a novelty, then slow down a bit. I think the average paperback novel reader would accept advertising in exchange for a reduced price--or no price. But I don't believe there will be enough advertisers to support the concept in a big way. There are already so many other advertising venues that it would seem the advertisers' budgets can't stretch any more. But then, I don't know everything about advertising.
For a look at free downloadable E-Books supported by advertising, see this post, or check out WOWIO, which offers free E-Books--both classics and more contemporary work by people like Kurt Vonnegut. (Or, read my post about WOWIO here.)
It's a nice place to start if you want to try out reading E-Books on your PC, laptop or other device.