My friend and I discussed this the other week before he launched his app. He had the same concerns.

I always try free ads if they have ads and I like them I go looking for the paid version. When there isn't one I get frustrated. If you're going to put ads, make sure you have a non-ad version.

What he ended up doing was releasing a paid version but ran a special promo where people could get it for free for a limited time. these initial free users will spread the word post reviews and will tell you if they think your price is too high.

Good luck on your launch.