It is absolutely crazy that you had to pay a fee for a wallet service back then... (if I understood it correctly, you pay for the web hosting and the wallet account...right?)
I think it was all part of the hosting package. You bought hosting, received an email address, and a bitcoin web wallet. All that cost 25 bitcoin per week. That's how I interpreted the offer.
What happened to Gavin's faucet? (Is there any archived info about that)
Gavin was giving away 5 bitcoins at the beginning. The earliest achieves date back to July 2010 when that offer was still available.
http://web.archive.org/web/20100703032414/https://freebitcoins.appspot.com/As the value of Bitcoin increased, Gavin naturally lowered to faucet amounts. In August of the same year it was down to 0.05 bitcoins.
http://web.archive.org/web/20100805002250/https://freebitcoins.appspot.com/This was later lowered to 0.005 bitcoin and I think the last faucet drops were 0.001 bitcoin. Somewhere towards the end of 2012 the faucet no longer gave out any more bitcoins. I think I read somewhere that Gavin gave away over 20.000 bitcoins through his faucet in the early days. He was instrumental in fueling the early adoption.