http://www.opendns.com/ works pretty well and is free. The setup is a bit geeky since you have to configure your router for it. But once it’s set up it protects any computers in your house.
We’ve also taken advantage of the parental controls built into our Macs.
I do not know of a free internet filter. However, for the small yearly fee we pay for Safe Eyes, it is highly worth it. It’s extemely reliable; the best one we’ve found so far. Its very easy to set up, has loads of other features (such as time management, etc.), and can be used on multiple computers. We’ve found this very valuable for our family.
We had someone stop by our booth at the Michigan homeschool convention last weekend mention that Netgear routers have a parental controls feature built in that can protect all of the computers in your home. I just checked and it’s based on OpenDNS that I mentioned earlier. Here’s their page about it: http://www.netgear.com/lpc