That's what I'm wondering too. I figure it'll get incredibly expensive to host all that data, but on the other hand, if they want this to become a platform, so that developers will write their applications for Mesh, they need to have a huge install base. And while I could imagine the average majority going "Sure, I'll install that if I need it for X" when it's free (You don't need to pay for .NET or for registering a Live ID either, after all), I don't see people going "Sure, I'll pay for this... sync.. platform.. technology.. program" and drop $29 on it every year. I think that for Mesh to become a success, it needs a huge install base, and to get a huge install base, it should be free.
Then again, how would they profit from it? Licensing?