You can have paid and free issues in the app. To stay in Newsstand you'll need to maintain some kind of paid subscription, but you can make all your issues free.
For future issues, just publish them as "Public, Free" edition. For previous issues, you treat it just like an update, changing the paid edition to the "Public, Free" option.
Considering that people have paid for subscriptions, you probably will get some push back from people who have paid and now see that other people can get the same content for free. So get ready for so very unhappy subscribers.
The way I understand it from reading http://www.adobe.com/devnet/digitalpublishingsuite/articles/adding-digital-publishing-suit e-apps-to-apple-newsstand.html I don't see why you would have to have some kind of paid subscription? Its referring to the iGizmo magazine there, showing that a free subscription also allows the magazine to be in the newsstand. The only demand is that it is a subscription offer, free og otherwise.
I know I can publish as many free issues as i want even though I have a paid subscription option, but obviously that is confusing for end users, and I want people to have the ability to subscribe for free. I'm just not sure how to implement that change, seeing that I already have a paid subscription set up.
When it comes to unhappy subscribers and so on, I actually have more than 90% of the subscribers contact details through opt-in reports, so that will be handeled by paying back the customers of course.