Oh, I know my shit about freeware.
You
really don't need to pay for any software to run your PC. If you think about it, it's pretty abhorant that you should ever need to. After paying so much for the machine itself why should you have to pay more to make it simply FUNCTIONAL.
For some of the below I've been to lazy to get the url's but they should be the first result returned in google in each case.
ESSENTIALSOpen Office is good, be sure to enable the UK english dictionary or it will tell you that colour is color and footpath is sidewalk

I find OO can be slow to load.
Abiword is another option (word processor only, not a full office suite) but I've read that it can have trouble with very large files. If you're looking for something to write a novel on might be best to skip this.
As for Anti Virus, you might be interested in this. You should read it before you pay to renew your Norton subscription when it ends.
http://www.lifehacker.com.au/2009/11/stop-paying-for-windows-security-microsofts-security-tools-are-good-enough/(though only if you have a legitimate copy of Windows

)
Deepburner or
Imgburn for CD/DVD burning
Chrome,
Firefox or
Opera - I use Chrome on my netbook as its lightweight and Opera on my desktop because it fucking rules. Personal preference though, they're all good.
VLC great media player, dont need to install codecs
Ccleaner for cleaning temp files, the registry, uninstalling programs
7zip free and superior alternative to winzip/winrar
Dropbox file sync and online backup. You get 2GB of free space. Whatever files you put in your "My Dropbox" folder will sync to any other PCs you install it on and also you'll have a backup online. If your PC dies you just reinstall dropbox, enter your account details, and these files will magically reappear on your machine
BACKUP (IMPORTANT!!!)Syncback FreeWill sync your HD with an external HD (or anyfolder to anywhere for that matter).
Clonezilla Live CD If an interface that looks suspiciously of the early 90's scares you, you might be better of skipping this one. If you've heard of Norton Ghost, this is a free alternative. Will clone an image of your HD to an external HD or wherever. You can restore your PC to that state whenever you want. This is not the same as Windows System Restore. Restoring from an old image will delete all files created in the interim. This is always a good precaution to take: when your PC is new/freshly reinstalled, install your essential programs (skipping ones that update regularly such as Ccleaner, you'll just have to rinstall that at next update anyway). Then create an image of the HD with Clonezilla. If after 6months/a year your PC is sluggish you can back up your files an documents to an external HD and restore the PC to this previous state. No need to reinstall windows or those few chosen essential apps. Then copy your files back on (though you should check them for viruses first, ideally with another pc, but with your own will suffice)
RecuvaNot exactly a backup program, but related. This program will do its best for you to recover a file from deletion, even after the recycle bin has been emptied. Install this NOW - not when you need it, as anything writing to your HD (such as installing this or any other program, creating new files, etc.) after the file has been deleted reduces the chances of it's recovery.
OTHER PROGRAMSDon't go installing a load of programs on your PC just because they are good & free, but if some of these sound useful I vouch for them all!
GIMP,
Paint.NET,
Photofiltre,
PhotoscapeImage editors, listed in order of intricacy/ability. i.e. the last is the easiest to learn but does the least. I really like photofiltre because it's very light and does alot for such a small program.
Launchy - Launch programs from the keyboard. Once you get used to it, it's much faster than the start menu. Some of this functionality is built into the start menus of Vista/7. I'm still on XP so excuse my ancient ways.
Rainlendar - Calendar program
Truecrypt - if for some reason you need to encrypt files
Notepad++ - a great replacement for notepad with url detection among many other features
Everything - A search program miles faster than windows search (fi you want to know why it's faster read the info on the site)
http://www.voidtools.com/Teracopy - takes over the move/copy functions from windows. Allows you to pause and resume copy operations, as well as line up batches of jobs instead of running all simultaneaously as windows forces
Unlocker - allows you to move/delete otherwise unaccessable files.
Sumatra PDF Lighter than Foxit or Adobe Reader
Keepass Do you keep alot of different passwords for websites/forums/email. This program will keep them all in an encrypted database, generate secure passwords for you and autofill them in the relevant sites.
---
More to follow, the forum doesn't like my long post!