It's at least a little harder to get that freehosted blog to rank well in SERPS. I got a keyword1.net domain registered a few weeks ago, put up 3 posts and I was already on the first page for keyword1. I also took a keyword2.subdomain.com and am still fighting to have in rank in the first few pages at least.
And yes the keywords were comparable when it comes to the number of searches and google competition.
Conclusion: subdomains on freehosted sites are good for building backlinks from different urls and sets of ips, or if you don't have the money to go with your own domain
