Wow, thanks for the responses! I don't typically check the business forum so I didn't notice until now.
I think you guys are right, I had the unconscious notion that making products cheaper = providing more value, but this actually takes away perceived value in the consumer's eyes. And the extra money that can be earned can be recycled back into the economy, being able to help more people where it matters.
Our business recently had the possibility of giving our software products away for free to universities (since they couldn't afford otherwise), and I wasn't sure what to do, hence the post. There are pros and cons to it both ways, but now I realize that the ethics of the issue shouldn't come into play