It depends on which direction you'd like to take it; competitive pressure plays a big role. There are several potential revenue models, however:
1. Ads on user pages - this is the most common monetization model for free hosting and it is rather uncompetitive. Not really a great way to go anymore unless you're looking at something like pop-unders (which are still a huge irritation to your users).
2. Surveys on signup - you could require your users to complete surveys through a company like MONETIZEdigital (used to be called CPALead). You could also look at an adver-captcha like what is offered by Solvemedia. A good way to make money, but it is a turnoff to users so you will lose some signups.
3. In-panel ads/sponsorships - if you have a very large user base, this can be great. You need a lot of traffic in your control panel to really attract any advertisers, though.
4. Email advertisements - as long as you appropriately address this within your TOS, you can send email advertisements to your users. Again, you need a large userbase first in order to attract advertisers.
5. Paid hosting - you can offer paid hosting upgrades yourself or partner with someone like FatCow and offer paid plans thrrough affiliate programs.
This was off the top of my head - hope it helps.