I've looked over the product pages and I can't see much about the ads. They're not going to be in books, thankfully, but you will see them when the Kobo Touch is in sleep mode and they're also going to be at the bottom of the home screen. This is pretty much the same ad locations as on the Kindle, and you know how much I liked those ads.
There's no word yet on what type of ads it will have or how often they'll change, but the product page for the $99 Kobo Touch is now up. Go check it out.
But before you jump on this price, let me warn you that it's not as good of a deal as you might think. Geeks.com has a refurbished Kobo Touch in stock every so often. They sell it for $99 when they have it (just not right now). Also, Mike Cane reminded me on Twitter that the Noo Touch is also $99, and it doesn't have ads.
To be honest, this comes as something of a surprise. I haven't heard even a whisper of a hint that Kobo had been planning this, and I didn't think they were capable. Needless to say, I think this was a smart move. They couldn't match the selling price of the ad-subsidized Kindle directly, so they did the next best thing. They copied Amazon, and what's more - they beat Barnes & Noble to the punch.