While there is no shortage of sites that offer mp3 downloads, both legal and illegal, the concept of a site for legitimate free mp3 downloads that is completely supported by ads remains elusive. The latest site to take a stab at making this model work is We7, a new site with a prominent backer in the form of no other than Peter Gabriel.
Currently the site is still in the early stages and the range of (DRM-free) mp3s available for download is still quite small (I counted 8 artists and 19 tracks, but I guess you have to start somewhere).