There are many hosts with 'free gift' opportunities, were you talking about Brius web hosting? They were doing an ipod promossional offer.

It does attract users in my opinion, but only to whom are actually looking for the real product..

For example, with the first 25 people and an iPod thing, I don't think that someone would just sign up, for the iPod, I think that they would need to be interested in THEIR web hosting specially.. the 'free gift' just lures them in..