How many items are there
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At one point the estimate was around 300 million unique items or so. There are no real statistics at this time. Remember, *all* content is created by the *users*, not Linden Lab (the platform creators). Creating content takes hours of patient work, and quality items are done by very skilled artists/builders/programmers. They expect a return on their investment in time, and that's why they charge you for their high-quality work.
You might therefore think that anything free will be of lower quality, and often you would be right. However, many free items are quite well made: their creators have decided to give them away because they have become unfashionable or are simply no longer new, or from social/political motives similar to those behind the Open Source software movement.
There are many places in Second Life where you can find things that are free or very cheap. Shops will often set out free items as "loss leaders" to give you a sample of the owner's style and skills. You can find free items by searching for freebie, or by joining one of the many groups dedicated to sniffing them out. (Free items are called "freebies", so the habit has arisen of calling items that cost one dollar dollarbies.)