"Project Spark" is the name of an internal project. Yes, Project Spark will be released for free. It's being released as a beta for people to use.
Has Microsoft said that the final product will be free? I don't recall ever hearing that. If it won't be, then what's the cost and what about player created content? If it will be, cool, but still what about player created content?
I don't think Microsoft has said anything about the final product, just about Project Spark.