There are some software packages that blow away the licensed ones. I prefer the free ones,but mainly because I don't need a lot of features. I know that the better programs for artists and such are going to ones you pay for,but for the average person its fine to get a free one.
At the end of the day,a photo is a photo. Most photos taken every day with photo software are meant to be looked at and stored in a folder on a computer or a hard drive. Software that puts a watermark on the photo is meant for photographers that make their living taking photos. They are a very,very,small percentage of people who take photos.
When given the choice, one should always choose copyright free software (including software used with digital rights management and all other forms of protection) over proprietary software that requires the user to sign certain contracts. Especially with photo software, the user is inherently less free to do certain things with their images.
Yes, copyright-free photo software is better than the alternative, because we can all use it. It is easier to work with the software knowing that we do not have to worry about copyright laws. Of course, the person producing the software has to be willing to offer it for free.
I do not believe copyright-free photo software is better than the alternative. The best photo software you can obtain is going to cost you cash because it is not shared openly for free. I assume the question could refer to a lot of different things, but from what I can tell it is simply referring to the software itself.