Yes, spending some money has its advantages, I particularly liked having the ability to auction more than one item at a time...
The game is perfectly playable without paying. There is enough low-level content to give you a bit of a run, and you can delete your character and start over again. I am not sure if the new underdark bit can be bought with points, but as a general rule, all the classes, races, and adventure areas can be bought with points, and you can get points based upon favour. Your first run through will get you more favour, so don't get too accustomed to the initial point accumulation speed, it balances out at about 25 points per 100 favour. You are advised to get more adventure packs initially so that you can get favour faster, and there should be enough race/class combinations amongst the free stuff to keep you going.
Favour is gained based upon the highest difficulty that you have completed each quest on. So you can run a quest on normal, gain a few favour, then run it one hundred more times on normal, get no more favour, then run it on hard, and get a few more favour, then run it on elite, and get still more favour, then run it on normal and get nothing again. Or you can run the quest on elite the first time* and then there will be no way for you to get any more favour out of that quest without resetting the character or getting a new one.
*to play a quest at eliteor hard difficulty the quest needs to be 'opened' on elite or hard, and only subscription payers, people who have completed the quest on the previous difficulty, or characters who have pulled some high-level shenanigans can 'open' a quest on hard or elite. So if you want to play a quest on elite, to get the maximum favour from it, then you need to get someone else to open it for you, or play through the quest on normal and then hard first.
There are various sales, if you do decide to spend money, then you are advised to wait for a double bonus point sale, which will get you a few more points for you money. I have seen adventure packs for 50% off, but that was a long time ago, the new low seems to be 35% which can then be lowered with the once-off 10% off coupon, which you probably want to save for something expensive... The vale of twilight is a popular choice for first adventure pack, it has a wide level range, good items, lots of favour, and is played often. Ruins of gianthold is also often recommended. There is a Free to play guide
here.
The
sales and promotions page seems to be updated about once per week around thursday/friday and often tells you about cheap items and has had a recent policy of offering free items of a vaguely useful nature. Right now there is a 20% sale on some storage items and a code to get a free temporary loot-improving effect. Note that most items bought from the store cannot be traded to other people, so will be lost if you recycle the character slot. Also note that some items can, technically, be transferred between your characters, but in practice the only way to do it is with a shared bank, so that is one of the items that you are advised to get early.