I can't see any that are free P&P. Most are set at + £3.74 postage. Obviously they only pay a very small amount for postage and packaging and hope someone bids it up.
I've also heard that they use other accounts to run the bidding up (this came from what seems to be a reliable source). Either way I think it is fairly safe enough to bid if you like the item. Just bid up to a point you're happy with. Don't forget to double check the cost of postage and packaging to your address/country. Obviously you aren't going to know how good the quality of the item is until it arrives - probably not amazing.
Thanks for fast responses. If you enter watches; price + pp lowest first option, pages full appear. I guessed the 1p was a "come on" and the bidding would go up. Nothing to lose if I put my maximum and win. I would guess their auto bidding will stop when it reaches a figure to cover their outgoings.
I think so - my 99p listings (started at that price because it's free) often attract bids nearer the value of the item. If these watches only sell for 1p, it's a risk the sellers take. If they sell in hugely high volume, they can probably afford to take a loss now and again.