Microsoft are currently providing their next generation cloud hosted TFS service at tfs.visualstudiow.com – private repositories are free for up to 5 users but they have indicated that they will be charging for the service when you in the future when you have more than 5 users in your account.
If you are a small start-up and wanted to use TFS inside your firewall, then take a look at the new BizSpark program from Microsoft. This provides basically everything you need to start up a Microsoft technology based company for free (apart from the hardware) – including TFS and Visual Studio.