A business model like the following has been busted (especially if you want to raise VC funding):

• have a great idea
• build a nice demo, alpha version of your idea
• raise a ton of money
• get millions of users (after a couple of years)
• throw advertising around to attempt to make tons of money

However, there are tons of  business models out there.  Here are some of them:

• Freeminum – give away most of your service for free.   Charge for a few premium features.  Example: Craigslist(charge only for job posting), TaoBao(no listing/transaction fee, sellers can pay for additional services/promotion), iPhone apps, Flickr
  
• The “Woot” model with Guerrilla marketing- one kind of product  per day, limited supply.  Bag of craps. example: Woot
• “Pay what you think it’s worth” – let customers decide how much your service is worth.  Not many people/companies have been brave enough to embrace this business model.  It’s quite popular in open source software offering(you can call it “donation” as well).  Modrails currently offers Phusion Passenger Enterprise via this way.
• Open source software model: give software away for free. Charge for certification, support and service subscription
• “Pay as you go” utility model – charge customers by their usages.  They don’t need to pay when they don’t actually use your service.  Example:  Amazon Web Service
• Monthly Subscription – you charge a monthly fee for different level of services or supports.  Example: SalesForce, NetFlix
• Middle Man/Broker – You act as a middle man to facilitate a transaction between a supplier and a demand.  You take a percentage cut of a completed transaction.  Example: Google AdSenses, affiliate marketing in general
• Money printing machine – this is a dream for everyone.  eg: Google Adwords where advertisers pay for clicks/impressions/actions
• Learn from gaming industry where gamers have been willing to spend money – 29 business models for games

Other resources:

• In a battered economy, free goods and services online are more attractive than ever. So how can the suppliers make a business model out of nothing?  Wall Street Journal talks about the Economics of Giving It Away
• is the free ride for web startups is over?

Whatever business model you come up, you really need to provide values to users and work on stuff that matters.