I think the key is in the ads being relevant, useful and not intrusive. Those horrible flashing banners from gambling sites, pop ups and banners that take three seconds to disappear and don't let you in the site all destroy user experience.

The same as Google - if the ads are relevant to what you want and not too intrusive nor too many then they are part of a positive experience. If you join the roller blade club it may be useful to see ads of deals on new roller blades. Google tries to achieve this by penalising irrelevant ads - ie those that get low click throughs by seeing this as a vote of 'relevance'.

Another interesting idea I heard was the ability to let users choose the kind of ads they would be willing to see on the network.

I think users accept that the service costs money and that the provider will have to pay the hosting, development and salaries to provide a professional service. The same as Google - you get an excellent search tool for free but who complains about the ads by the side. 65% of users are said to never click a Google Ad but they get to use the search tool with no problem. Google and its advertisers make enough money out of the other 35%.

It is part of a bargain - you give me a nice social network and I will accept to see some ads.