Affiliate marketing, how do I use it correctly?

I have been battling with the need to find a balance between providing content for free and where it is ethical to put affiliate marketing.

What is right and what will stop people from becoming turned off by the prospect of being on my sites.

Also what will make people actually want to shop through the affiliates? For Condom Monologues and The Random Forest I am trying to find good quality affiliates that I will actually use for shopping myself.

Do you use affiliates and how best have you had luck?