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Actually name server changes should be almost instant these days with most registers. What happens though is most people visit the site just before they change name servers and it is cached by the ISP. So the trick is to not test your site out at least 10 minutes before you change name servers...

Try some of these but maybe check out Webhosting forums http://www.webhostingtalk.com and ask around there or read reviews first. http://www.hostlane.com/ http://www.hostgator.com/ look around for coupons and you might get a discount too.

Yes there is no point in bothering with free domain names and websites, you will spend far more time with all the issues associated with this. As mentioned, domain names can cost less than a $1 or for a .com less then $10 for 1 year so the cost should not be a factor. As for hosting, you can pay...