In my relatively short career as an ICT teacher (secondary) I've used a fair amount of free software both personally and at college.We use free software at our college partly to keep our costs down but also so the students can download and use the software at home. Much of the software is actually more interesting and more fun than the software we pay for...
Open Office
Similar to Microsoft Office, Open Office can open all Office files and save files as office files. Works very similar to office, better in most opinions!
Google Documents
Google Docs is online free software. Create files online and share documents with friends & colleagues. You will need to sign up for a Google account. Includes a version of PowerPoint, Word & Excel.
Scratch
Free games design software. Easy to use with plenty of tutorials and examples. Software produced by MIT for schools, used by students in junior and well as senior school. Used at the college in ICT.
Stick Man Pivot
Free animation software. Animate a stick man or two - make them dance!
GIMP (GUI Image Manipulation Program)
Free graphic design software. Similar to Adobe PhotoShop or Fireworks. Very good, and free! Used at the college in ICT / Graphics
Google Sketchup
Free 3D design software. Originally designed for creating buildings for Google Earth. Used at the college in ICT / Graphics.
Google Earth
Free 3D map software. Fly around the world... See your house, plan your holiday! Used at the college in Geography.
AudaCity
Free sound manipulation and recording software. Used at the college for OCR ICT
Adobe Reader
Download Acrobat Reader for free to view PDF files
Firefox
Firefox is a very good alternative to Internet explorer, some say the best browser..!