I've been playing with the Grandstream Budgetone phones, they're cheap, feel cheap, but they work very well.

So far none of the free services I've seen allow SIP-PSTN connections except to toll free numbers in the US. The service I'm currently using is Free World Dialup, and they even will supply you with a good software client if you don't have a SIP phone.

There's also SIPPhone run by the same people as Lindows, but their service doesn't work behind an IPTables NAT, so I took the phones I got from them and re-programmed them to use FWD.

My FWD phone # is 54125.