i have been waiting (seems like enternity) for my new Intel iMac, and with 10.5 being released next year, would this be a free upgrade when it eventually comes out?
It will only be a "free" upgrade if you purchase your Mac around the time they release the date of 10.5. "Free" actually means $10 for the discs and postage.
All 10.x upgrades you have to pay for (except 10.0 -> 10.1 if you had proof of purchase for 10.0), all 10.x.y updates are free.
Same with Apple software, all updates within the same version number are free, upgrading to a new version will cost you, except of course for iTunes which is free.