This is an excellent subject to ask and I think extremely relevent. I installed Avast! Free on my daughter's new laptop that is running Vista Home Premium and it loaded without issue. They also have a great community forum which is a definite plus.
Why I chose to go with it was 1) For a free product it is amazing what it offers; just compare it to their $ version and there is very little difference, 2) Updates, 3) is not a system resource hog, and 4) it works with Vista.
AVG Free has not the greatest reputation recently from what I have read in my research. Understand, I am not anti-AVG and I am not bashing this ant-virus program.
AntiVir was another one I strongly considered.