Questioning motives behind the FOSS philosophy

One the first questions that people ask me when I tell them about free software is , "how are they going to live their life after writing the software and giving away the code? ".
I chose to speak about this today because of a very funny reaction my roommate gave when he discovered the power of FOSS.
He accepted the task of creating a website for a competition being organized by our department at college. He was all geared up to hand code the HTML, PHP and what not that would be needed to keep the site going.
To his shock, I demonstrated the use of Drupal ( with complete with site menus, user account creation and validation etc... ) in under half an hour ( most of the time was spent downloading the installers and themes ).
His reaction was "These FOSS people should stop doing what they are doing. How can they write all this code and give it away for free ?".
While there is no satisfactory answer I could give him, I did realize one thing.
All that talk of "free" meaning freedom and not gratis, its exactly where the confusion lies. Mostly because the software is being given off gratis, as in, most of it is freely downloadable.
I do realize that, if and when people benefit from the use of such software, its a part of their ethical responsibility to share their fortunes with the (FOSS) community, I have witnessed a large scale group meeting of the FOSS community representatives in India and the scene there was a little disheartening. All talk was about how to use the offerings of the community, very little about what to give back and how.
At the end of the day, when people ask me why is such good software being given away gratis, I have to deal them a (low) blow asking them to donate if they are so happy about it.
The sad thing is the reaction to the blow.
"Why pay when we get it for free ?"
That is the irony, isnt it.