I have two list of free essentials, depending on the user skill (and they overlap, so sorry my post is so long.)
Free stuff I'd bundle with a computer for an average user:
Opera
Open Office.org
AVG antivirus (free edition)
Windows Defender (only works on XP/2003/Vista(included) Spyware Doctor starter edition if they have a different windows)
Online Armor
Avorax shield
Standard browser plugins (flash, java, etc.)
K-lite mega codec Pack with quicktime/realPlayer alternatives and media player classic
PDF-XChange Viewer free version
7-zip
CDBurnerXP
Scribus
The rest of these are somewhat less essential or depend on user needs:
Humanized Enso Launcher
GnuCash
GIMP
Audacity
FreeMind
Exact Audio Copy
isobuster
Electric sheep or Really Slick Screen Savers
Google desktop
(for fun, depends on skill and taste:)
Celestia
Google Earth
Enigma
Neverball
C-evo
The Battle for Wesnoth
For an advanced user I have a different list: (this is subjective, so I went overboard. Your mileage may vary.)
(office)
Open Office.org
(coding)
NetBeans
Python
Nvu / Kompozer
(art)
Blender
inkscape
the GIMP
Audacity
project dogwaffle
(maybe) DAZ/Bryce
Scribus
(security)
AVG antivirus free edition
TrueCrypt
Sandboxie
(Internet)
Firefox (standard plugins, Wikipedia and AOL video search engines, download statusbar, downthemall!, pagezoom, maybe fasterfox, and whatever else you like)
(maybe)Google Web Accelerator
K-lite codec/VLC, etc etc.
BitTyrant
(other)
7-zip
VirtualBox
CDBurnerXP
DebugMode Wink
Enso launcher
Arainia Gizmo Drive
GraphCalc
Restore Desktop
FreeMind
Revo Uninstaller
JKdefrag
(not installed)
Knoppix (as a live-boot disk for emergencies)
Restoration (on a usb drive. I don't know if this is a very good undelete utility because I rarely use it.)
siw (you could install this if you want, but I also have one on my usb drive)
Maybe also some of the less essential things from the average list if you want them. What advanced users consider essential depends on what they do.
A whole slew of free games (maybe not essential), but that's another list
If you think you have a better (free) alternative to one of these I'd like to hear about it.