Paid hosting actually offers quite a lot over free hosting, namely more storage space, more bandwidth, domain names (such as website.com instead of website.host.com or host.com/website), no forced ads, and various tools needed for professional sites (php & databases being the major examples). And overall, you get more control and flexibility over your site.
Paid hosting isn't for everyone, though, and the best way to usually find out is to try out free hosting first and then move to paid hosting if you find free hosting isn't filling your needs.
In your particular case, though, a lot is hanging on how professional you want this site to appear. Sites that use sub domains + have host enforced advertising (usually banners and/or pop ups that you have no control over whatsoever) don't tend to give off as much of a professional appearance as sites that have their own domain names + no advertising or well placed, discreet ads.
Templates, in themselves, are easily obtained, and there are also tons of editors and management systems that allow you to create a website without the need to code. Also, many paid web hosts offer their own templates/editors to aid you.
I would like to make a website for an organization that I belong to. I have been looking into free website templates, but then checked into Yahoo, for templates, hosting, etc.
Why do you need to pay for hosting, design and etc. if there are "free" sites? What is the difference?
Please help so I know the right way to do this.