So long as the manufacturer disclosed the shipping charge at time of purchase, somewhere in the sales documentation or on the "coupon" for the free upgrade, i have no issue covering shipping. If this was not disclosed, then I considder it part of the original price I already paid, and be damned they'll deliver it, or there will be a formal complaint to multiple organizations.
A digital copy is also not the same. I use an aircard for my internet connection, and the copy alone exceeds my monthly alottment for bandwidth, and nothing in the coupon indicated a requirement of an internet connection to receive my free copy.
Ok, that said, I'm not actually subject to this as I've neither purchased a qualifying machine, nor do I require a copy of Win 7 (I'm already getting a few dozen from M$ care of my action pack subscription). However, I was stongly considdering a purchase, and if i was shafted by a manufacturer in this way, it would guarantee at the very least a refusal for future business, and likely a return of the product if I was within the return window.