Players who choose to engage in free-to-play will be able to experience a majority of the game for free, including the first 50 levels and all eight classes. BioWare did state that there will be restrictions, but those can be removed with microtransactions.
SWTOR will still be available in the standard subscription model. Subscribers will be given an allowance of store currency, called Cartel Coins, to buy customizable gear and other niceties. Current subscribers and those who sign back up before the fall can also rack up special rewards for when the transition is made.
BioWare GM Matthew Bromberg said that this is the next logical step for the game: "Players want flexibility and choice. The subscription-only model presented a major barrier for a lot of people who wanted to become part of The Old Republic universe."
Check out Massively's recent Hyperspace Beacon column on why F2P was inevitable for the game. BioWare's also posted a F2P FAQ with all the nitty-gritty details and a letter from the executive producer.
[Update: During this afternoon's investor call, EA President Frank Gibeau revealed that SWTOR subs have dipped below one million but are still "well above" half a million. Forty percent of those leaving do so because of subscriptions. The game claimed 1.3 million subs last May and had leveled off at 1.7 million in March, having sold in the range of 2 million copies. Gibeau hopes the new F2P model will win back players lost to churn.]