I get asked this question all the time. Every technician has a different opinion on this subject and they change sometimes based on how a product performs over time. There is no 100% correct answer but I will share my feelings on the subject. If you pick the right software, in general the paid software is better than the free software. For this reason I have a favorite free software and a favorite paid software. If you are a casual web surfer you should get by with a free version. If you use the net all the time and especially if you visit the red light district or share files, you will probably want to invest in a good paid anti-virus software.
For a free antivirus software, I have recommended Microsoft Security Essentials for about 1.5 years now. The free version of AVG used to be the best but it just doesn't seem that great anymore. When you see dozens of infected computers running a specific anti-virus program, you opinion tends to change quickly.
When it comes to paid software I have a few favorites. For most users I recommend Norton Internet Security 2012. The Norton products have improved greatly over the last few years in terms of stability and compatibility with other software. If you have Comcast you can actually get the Norton suite for free on several computers. Just install the Norton suite though and not the full total protect / constant guard software (why? that will be a future topic). If you don't have Comcast you will need to buy a subscription. Amazon frequently has good prices on Norton software for 3 or more PC's at a time. Kaspersky Internet Security is also a very good anti-virus software but can be a bit complex for many users.