When FOSS got strongly under way in the 1990s, proprietary software had almost two decades' head start. Under these conditions, for a long time, FOSS development focused on catching up with proprietary software. Also, the standards for usability were developed for proprietary software, so FOSS often seemed to be imitating its rivals, especially since one school of thought held that, to attract users, FOSS needed to resemble as closely as possible what users were familiar with.
Yet, even while the goal was equivalent functionality, FOSS never lacked for innovation. Both the GNOME and KDE desktops, for example, allow a degree of customization unheard of on the Windows desktop, to say nothing of standard features such as virtual desktops. And now, with the release of KDE 4.1, some developers maintain that the FOSS desktop has surpassed proprietary ones, and is now setting the pace for innovation.
Similarly, FOSS has caused a revolution in business, showing that companies can be successful by selling services rather the software itself. You might say that the very idea of FOSS is a major innovation -- to say nothing of the communal organization in which FOSS development takes place.
The truth is, proprietary licenses restrict users far more than any FOSS license. If you read the typical end-user license agreement closely, you find that you don't even own the software that you buy. What you have purchased is a license to use, and that license severely limits the number of computers you can install it on and your ability to work with the code.
By contrast, FOSS licenses give you a right to the source code and to use it more or less how you want. Such restrictions as they include, such as preserving copyright notices, fall upon distributors more than users. BSD-style licenses are so permissive that you can even incorporate the code into proprietary code.
Copyleft licenses are more restrictive, in that they insist that, if you distribute the software, you do so without changing the license. However, that restriction simply means that you pass along the same rights that you have in the software to anyone who receives a copy from you. Compared to proprietary licenses' terms, this is a minor restriction, and justified by the theory that the only way to ensure your own freedom is to ensure everybody's freedom.
The fact that FOSS is often free for the downloading is often what attracts people to it. However, if the lack of cost was a primary motivation for using FOSS, then it would probably be no more popular than shareware.
Those who stay with FOSS usually do so for one of two reasons. For free software supporters, the reason is that they wish to control their computers and what they do with them, rather than allowing a company to exercise that control. For open source supporters, the reason is that freely available source code is an extension of the academic free exchange of ideas, which they believe results in better quality software. In both these cases, it is idealism, not price, that makes FOSS attractive.
Anything said often enough takes on a life of its own. And, because FOSS is relatively unknown and is different from the proprietary norm, it is likely to continue to attract rumors and half-truths. For these reasons, while the myths above are easy to debunk, I don't imagine that doing so will greatly slow their circulation -- nor stop other misconceptions in the future.
Perhaps, though, by answering these myths when you encounter them, you can clear the way for the greatest argument of all -- sitting the users of proprietary software down with FOSS to try it for themselves.