I agree, I think 5 hours is the minimum for a commercial game.
On what separates a commercial from a free game, I think probably many people would say the same thing, but with slightly different words. My way of describing it is to say that I think with a commercial game there should be an immense attention to detail. Everything has to be of a good standard. As matseb said, you're not allowed the same leeway for mistakes that you're given with free games. And I've seen a number of games where the broad brush things are done well, but the small details that really draw you in to a game have been neglected.
I also think that with a commercial game there needs the question of replayability needs to have a higher profile than with a free game. With a free game, if you get one good playthrough out of it, that's fine. With a commercial game - even though in practice many players never replay a game - there is the hope/expectation that it will have a decent replayability value. Players like to think that if they wanted to replay, then they could, and it would be (at least in some significant respect) a different experience. This doesn't have to be about having different endings. It could be that you have a very different party composition. For example, in your first playthrough, you picked Fred to be in your team to do a side quest. Because Fred was present, an optional character refused to join you. On replay you know you have a choice - Fred or the other one. Or the same party, but with such different skills among them, picking a different party will result in having to find a different strategy. Maybe lots of secret rooms, side quests, other things to find, which the player probably won't all get in one playthrough. Anything like that which extends the relative length/price ratio by effectively giving the player 1.5 or even 2.0 (or in rare cases, even more) games for the price of one.