Any developer freelancing or working on random side-projects should have an LLC in place. You can't go wrong, all it takes is about $300 on http://legalzoom.com, but it covers you personally if your product/services ever gets into any trouble and provides tax advantages too.
I would agree for freelancing but not so much for side-projects, though this depends upon your state.
If you form an LLC in California (my state of residence) you are now on the hook for paying at least $800/yr in taxes even if the LLC never earns a dime of revenue. The theoretical amount of legal protection you get from an LLC here is not worth the cost, IMO, for simple non-profitable side-projects.
The "it's cheap to form an LLC" mantra is common, but not always correct. In NYC it costs well over $1,000, and can easily approach $1,500, because of "publication" requirements.
