Firstly a lot of people work on Ubuntu in their free time (many of them programming, but also those of here for instance answering people's questions). Also some people donate to Ubuntu.
However there is more to the story. Canonical Ltd. is a private company that created and continues to pay for Ubuntu. We know Canonical hadn't been making a profit, but Canonical was initially founded by multi-millionaire Mark Shuttleworth which meant it didn't have to focus on making money right away.
However Canonical is now looking towards to making Ubuntu profitable. (After all, they have 600+ employees to pay every month!) There are some indications this has been successful. Their key revenue streams offer services around Ubuntu:
Support services (mostly to business) alongside which they sell Landscape
Contracting services to businesses (for instance working with OEMs such as Dell, or helping Google with Chrome OS). As Ubuntu makes its way onto mobile phones and TVs then this will grow.
Ubuntu Software Centre's paid section (Canonical takes a cut of purchases)
The Canonical Store (selling physical Ubuntu branded items) - discontinued
So far only Paypal is the only accepted form of Payment. Canonical’s Jono Bacon says that this is only temporary and that ‘other payment mechanisms are currently being explored’.
Best Answer
Ubuntu actually really needs your support. You can now help and support a huge project with small pledges.
You can buy all sorts of branded gift items and at the download page you can give freely using paypal (the link is an example).
[credits of the image: http://meta.askubuntu.com/a/7050/115155 ]