If a developers game is high in the charts, they may go free temporarily to improve their ranking, to ensure they maintain the visibility associated with being near the top. If a developers new game has enjoyed an initial burst of downloads and then sales rapidly decrease, the developer may try to regain ground by switching to free. If a developers spent months or years developing a game and it's not selling, they probably figure it's better to have it downloaded for free (sometimes with adverts, IAP or cross-promotion of their other titles), then to have the game ignored.
There's more to it than that, nothing is truly Free unless the developer has given up completely and the game goes free but remains on appstore so the dev has something to show in their portfolio Just because a game is not charging money upfront doesn't mean it isn't getting something back for it, for the reasons stated above by Red1 as well as for a number of other marketing and PR reasons
Some good points above, but generally the in-app purchases is the real revenue generator. Check out the top earning games lists, most of them are free, with IAP.
IAPs has been a good revenue generator for me but I was really amazed by the revenue using services like Chartboost can bring as well.
There is a small amount of successful free games. They are not really free, they are just freemium and that's a big difference. Previous model when you bought an app is dying. Now you download your game for free and then being monetized. For example, Finnish company Supercell has two game titles Clash of Clans and Hay Day. Both games are free. Yet, they are making over 4 million dollars per day. You can read my analysis here.
All above are correct we are many developers such as us will release free smaller games to gain users to monetize and cross promote across our portfolio. It depends on the game and cost associated with it what direction you can go, but FREE seems to be the way to go to get downloads..