As far as I can tell developing for Silverlight is free as long as you already have Visual Studio 2008. Does anyone know if MS has any plans to change that?
If anything, they will try to make it easier and cheaper. One recent program is called WebSiteSpark... which gives away all of the Microsoft Web Dev tools. This is because of increased competition between Microsoft and competing technologies such as those provided by Adobe.
Silverlight framework itself is a free download from Microsoft. What exactly do you mean, when you say "developing for Silverlight is free"?
You can develop Silverlight applications using Visual Web Developer Express, which is free.
And I don't think Microsoft has plans changing that, because that would mean they get a lot less new Silverlight developers, and it would take longer for Silverlight to catch up to Flash.
And if Visual Studio isn't your cup of tea, there's always Eclipse Tools for Silverlight which is also free.