This particular model is a Freeview Decoder and a Personal Video Recorder (PVR). To our American cousins, a 'Tivo'.
In the UK all the analogue telly signals are being phased out and everyone who wants to watch TV will either have to get a decoder or a new TV with a digital decoder in it, if they want to watch TV.
Freeview gives you around 30-50 channels compared to the old 5 chanels on analogue.
I am fortunate to have Sky myself, (Still have my original Tivo as well) like the sport, films etc. I have the Sky+ bit so I can pause live TV etc. Record programmes with no tapes, straight onto the Hard Drive built into the box.
I like the idea of Freeview, because as you said it's free (except for the cost of the box). The difference between the £50 and the £200 ones are that some just decode the signal so that you can view the pictures whilst the more expensive ones have PVR's built in, as it were.
If you watch a bit of telly then they are very good. I have a young son who I like to play with in the evenings, so the TV is generally off until he goes to bed, everything that my Wife and I watch is always recorded - PVR's make this so much easier.