First - I will say that I will not be putting ads up on my blog. I'll cover my reasons behind this in depth, but the long and the short of it is that I think in 99.9% of the cases, they're just dumb. Obviously, I don't have any math to back up this revolutionary thought, but I'll give a go at why they make no sense.
I don't visit your site in the first place
I do the vast majority of my blog reading though a feeder. The only time I visit a site directly is when I feel the need to comment on a particular topic, and that's not too often. Usually by the time I get to a site my comment has been voiced 85 other times, and it just gets lost in the noise. Unless I feel like I'm actively discussing something, I don't comment. I accept that this is how I work, and so while I love comments, I don't freak out when I don't get any. A comment of "totally agree" just doesn't do much. A comment that continues discussion is pretty nice.
More to the point though, is that I don't even know what my site looks like half the time. I do a lot of my posts via email, and I kind of forgot that my site was even as dark as it was. I actually get surprised by the design of some sites, just because hey - I've read their posts for years, and never visited the site once.
What really detracts from a site though is ads. They're in your face, flashing, trying to seduce you into clicking on them. Does anyone still click on these? I can't remember the last time I saw an add on a website and thought "oh man, that is EXACTLY what I've been looking for". I don't even click an ad to get to Amazon. If I want to find a site I'll either Google it myself, or put in the URL I know.
How much money are you really making?
Unless you're getting thousands of hits a day, and by thousands I mean 10s or 100s of thousands, your annual revenue from click through ads is going to be somewhere around $4 a month - maybe enough to get yourself a double-double and a doughnut at Timmy's. Most of us probably lose more than that in our couch cushions - I know my wife pulls more than that in change out of my backpack every week.
So again, unless you're racking in the hits, your odds of making any kind of cash through something like Adsense are really, really, low. Plus, unless you're negotiating for your own ads with companies you support, I don't think there is really any control over what ads show up.
Is it worth the cost?
In the end you have to ask if the revenue you're generating from random ads is worth the cost to your soul. If you can slap on an Engin banner and get free hosting - maybe that's worth it. Right now though, my blogspot account is free, my Vent/Mumble server costs something like 3 bucks a month, and I think the guildlaunch no ads site is what - $10 a year? I'll throw that money out of my own pocket to know that I don't have junk on my site that I don't want.