You may be able to get 10.1 for free, you could when they released it, not sure if that deal is long since expired. Wait a sec, no you can't get it for free because Apple would stop selling 10.1 at the release of 10.2.
So yes, you will need to pay $129 for Jaguar, then upgrade it. I would recommend it anyway, even if you find some way to get 10.1. This isn't Windows here, the differences between versions is huge.
And Mac OS X 10.3 "Panther" is being revealed in 10 short days
