Sources for Website Images

You get what you pay for, sxc.hu is the best there is for free and at this point they are little more than a marketing platform for Getty. It doesn't really matter though since they were never high quality. The bottom line is that photography equipment is expensive and taking a good photo is not a trivial thing -- it takes skill. There is no good free source of stock images.

And yes, everyone who isn't stealing is buying their images. In general, designers either put the entire burden of stock images on the client or they pass the costs over; this is not something designers take a hit on.