I recently hid the free tier on OnlineOrNot's marketing website as an experiment, since then my sign-up rate has decreased, but those signing up are more likely to use a business email, and actually start monitoring their APIs and create a status page.
Having a free tier has been great for word of mouth, but the quality of "customer" it brings is so low on average that I'm wondering if its worth it.
But companies with 20 servers might actually turn into 2000 server companies once they close their seed round or series A, and you risk throwing out those lottery tickets.
It might follow a power-law distribution like with venture capital in general - one blow-out success to cover the ten lesser investments.
If you are huge and able to run an SMB play or if you can attach to an accelerator and do this for qualified leads, sure.