This would probably be better discussed on the Selling Board, as people who buy Collectables tend to be less price conscious. I am not saying that price does not matter to them, just that they may not have an exactly matching item to price match with (as is often the case with new items.)
Personally I don't offer free postage; I take the view that buyers realise there is no such thing as Free Post, and that the postage cost for Free Post is built into item cost. However it is different strokes for different folks, and many sellers swear by it, especially those who are having to compete with sellers from China and other overseas sellers who can afford to offer discounted postage.
Every cost increase hurts, unless you can raise your end price to compensate. I have tried to absorb the eBay FVF on postage wherever possible but have had to add a handling fee to overseas parcels to compensate. This move by eBay is certainly making many rethink the sale of heavy items with expensive postage (especially overseas). Those who suffer most of course are people like you (and me) where the postage cost is obvious to the buyer, either through the use of stamps or postage labels. Those really big sellers, who use eparcel, couriers or Postage Paid stamps are better off because the buyer has no idea of the true cost of the postage. For this reason it is often better to use satchels where you can for parcels.
Selling on eBay is not easy and appears to get harder all the time. Because most eBay customers are casual buyers, they have no idea of the costs involved in selling, without even mentioning packing and posting costs. I personally think that Australia Post offers a very good service, but casual buyers quite rightly ask why our postage costs are so high compared (say) with what Chinese sellers can offer. Unfortunately this has nothing to do with AP, but rather what eBay and the Chinese Govt offers to attract the Chinese sellers.
However in my opinion eBay remains the only possible viable site for the seller of second hand Collectables, so it is a case of adapt to the changes or move on. 
