<p>My organization is working on building RESTful webservices on JBoss appserver. The QA team is used to testing SOAP webservices so far using SoapUI. SoapUI has a new version that has REST capabilities. We're considering using that.</p>

<ol>
<li>Are there any publicly available RESTful services available on the net for free that someone could test ? <br> </li>
<li>What tools are available(and used) for testing RESTful web services ?</li>
</ol>

CURL Gets you halfway there.  The other half is checking the headers, response codes and entity content to make sure its good.  You could use a variety of tools for that (in shell scripting land, piping the header and contents to files, and diffing them might just do the trick).   It wouldn't be that difficult to further refine the toolset, maybe stacking curl up with the unit-testing framework of your choice.
I built a rest webservice testing panel with AJAX.  It wasn't that difficult at all actually.  You have some security issues to work out (i.e. making sure that you have the test suite on the same server, or maybe signed Javascript.)