Apple has maintained the exclusivity of its platform in offering applications for the iOS platform. Hence, all applications that you want to install on your iPhone, iPod touch, or iPad, must be bought and downloaded from the Apple store. To install and operate any other applications, that are not a part of this platform, the phone needs to be jailbroken.
Similar to rooting an Android device, jailbreaking iOS, installed on your iPhone, iPod touch, or iPad removes the restrictions imposed by Apple, of exclusive access to App Store applications. It is perfectly legal in USA, but the warranty provided by the company stands void, if you go for it.
Getting Free Apps
If you are under the impression that Apple's App store doesn't have free apps, you are mistaken. There are plenty of free iPhone applications, for you to choose from and it's perfectly possible to download and install them, without jailbreaking the device.
All you have to do is open the web browser on your iPhone, visit the store, and browse through the free category of applications. There are plenty of entertainment and productivity apps that you can install for free. Just download and install them, to start using.
For the iPod touch
There are plenty of free iPod applications on the App Store, for you to choose from. Just visit the store using your web browser, choose, and download any of the free apps directly to your iPod touch. Once they are downloaded, install them to start using. There is no need for jaibreaking, unless you want to download and install Cydia applications, which are not a part of the Apple platform.
For the iPad
There are many free iPad applications, which have been made available on the App Store. You can download them directly to your phone, without any need to jaibreak the device.
As you can see, if you want to install free apps from the iTunes store, there is no need for you to jailbreak your iPhone. However, if you need to install Cydia apps, there is no option but to jailbreak the devices. I would personally advise you to avoid jailbreaking any Apple device, for the singular reason, that once you do that, the warranty stands void.
Just for a few applications, breaking your warranty is not at all recommended. There are plenty of apps to choose from the App Store and paid applications aren't that expensive.