I have a very big file (1.2GB) and maybe more that I would like to send to a friend over our internet connection. There used to be a free program called wwwfileshare to do this easily... but not it isn't free. Im sure there must be other programs like this that willl help me without shelling out a lot of dough. What options do I have?

1.2 GB eh?

Can you compress it to 1GB. Because if you can, http://www.yousendit.com/ allows you to send a file up to 1GB for free.

Another option (which I use more often) is send it through MSN Messenger. It will take all night, but the file will arrive and there is no limit that I am aware of.

I couldn't find one that allowed more than 1GB.

If you expect your file to grow - or transfer/share file(s) frequently, you might consider getting webspace.

Godaddy offers 5GB of space for $43 per year:
https://www.godaddy.com/gdshop/hosting/shared.asp?se=%2B&ci=260

You don't have to "make a site", you can just use it to store files that can be downloaded by anyone you give the link to. It's exactly what I do. I've got 11 websites, and many of them have files stashed throughout them.

You'd simply upload the file to a folder that you name, like www.yourwebsite.com/bigfile and anyone you give that link to would be able to download it.

(I don't use GoDaddy for my hosting; they're cheaper than the host I use - but for only file storage, I think $43 a year seems pretty good)

To add to the above excellent answers, you may consider cutting the file into smaller parts, by use of Chainsaw (http://www.frankenwandern.de/software/chainsaw.html) (an excellent little app that works a treat).
Then you could easily e-mail, yousendit, messenger or web site upload it.