I used to wonder why oscilloscopes started at expensive and quickly went to ridiculously expensive and apparently so have some other people. A few projects have cropped up using an Arduino and a their home computer as a very basic, low bandwidth oscilloscope.

Poorman's oscilloscope was the first one I ran across and was more a proof of concept as it only reads one ADC channel and does not numerically display the reading, it only graphs it.
arduinoscope is based on the Poorman's oscilloscope above making several improvements including multiple channel support, logic analyzer mode, and displaying numeric values in addition to graphing the readings.
Arduin-O-Scope appears to be similar to the Poorman's oscilloscope in terms of capabilites.
xoscillo is yet another option supporting Arduino and Parallax.

Keep in mind, calling these oscilloscopes is using the term very loosely. The approach these projects take have some obvious limitations:

• The ATmega's ADC has a low sampling frequency and is relatively low impedance.
• These projects are software-only (i.e. they are simply taking readings off of the built-in ADC's and displaying the values) and do not provide any input protection circuitry or voltage scaling so you're restricted to the voltage range of your Arduino (0-5 volts)
• When reading multiple analog and/or digital lines, you will pretty quickly run into bandwidth issues with USB and the default Arduino settings. (one quick improvement: increase the baud rate to the maximum possible speed. This will require changes to the Arduino and Processing code for the project.)

If you can live with the limits, this type of project might provide a 'good enough' solution for the ultimate 'free' (you already have the Arduino, right?) scope.