Paid version has no ads at all, absolutely none. It also has higher quality audio (192kbps, I believe), and basically unlimited skips (I've never hit the limit).
To me it is totally worth $36/year. I have it on close to 12 hours per day and I have not otherwise spent any money whatsoever on music in 5+ years.
I discover new music via Pandora as a pleasant surprise when something plays (like hey, I didn't know this group had a new album) since I don't listen to the radio, hence never hear any ads, lol.