Adds will only appear in apps that developers have specifically coded to contain them. This is not limited to free apps. There is no technical reason that a developer cannot use iAds in a paid app.
You may be able to turn off the location part by turning off location services for the app (or maybe iAds in general) but you certainly won't be able to turn off the ads altogether.
You may be able to turn off the location part by turning off location services for the app (or maybe iAds in general) but you certainly won't be able to turn off the ads altogether.