This is a really interesting question, which Mike Filsaime tackles on page 15 of the Butterfly Marketing Confidential Manuscript.

Basically, Mike recommends a FREE site with an option to upgrade. People who don't know you are more likely to sign up to a free site. They can always be upsold later in the sales funnel anyway.

You need a good, FREE front-end product so people can feel they will be getting value if they upgrade.

Also, consider the viral potential of a FREE site. People can sign up as affiliates and promote your site to their list, even if they are not personally interested in your products.

It's about spreading the word and building the list first.