I think this is the most simple argument (and true argument) there is when it comes to DIY websites.
Unless you knew how to do it, you would not build a house. You would not change the brake pads on your car. You would not rewire your house. If you chose to do take the mentality "oh how hard can it be" with lack of research and skill, all of the aforementioned points would cause damage to you, property, other people etc. It would ultimately cost you money, and ruin your reputation as well. Web design is not a different scenario.
The ultimate motto is "you get what you pay for". If you spend money, you will be given something matching the quality befitting of that money. If you don't spend a lot, you will get something where anyone could tell "oh yeah they haven't spent too much money on this".
It is also true to say there are a lot of cowboy's out there, which makes it harder for professionals such as myself and the other web designers/developers here to land work. But saying that, you wouldn't buy a car without test driving it or checking it out. If you don't research a company you want to build a website for you, then its your own fault if it goes wrong.
Moonfruit is being banded about a lot here. It's ok for personal sites. If you value the business then you must throw money at it. You don't get something for nothing!
Ultimately, the problem with these free website builders (even the ones you pay for to build a site for yourself) is that your site will look amateurish. Put it this way. If you went on to an eCommerce site, and it looked amateurish and badly designed, would you buy something off it? No. And do you know why? You won't trust it. If you go on to eBay or Amazon, they are sleeker designed sites, professionally designed sites. You will go there, and you will part with your cash. Also, with these sites your using templates. Whats to say your competitor wont use the same (or similar) template? If they do, this will cause confusion to visitors of both sites.
Maybe 15 years ago people could get away with this DIY attitude to web design. It was all new then, and no one knew what to expect. People are more internet savvy now, and it's important you get the professional help needed to make your presence online a success.