The key question you should consider: How long do you plan to stay at this job? If you're not going to stay long enough for the employer contributions to vest, then you'll need to think about a) how much partially vested money will you take with you when you leave? b) is the total of your contributions plus the portion of vested match you get more than you would have if you funded an IRA instead? My guess is the 401k would win because of the higher contribution limit, but you need to do the math for your personal situation. Of course, you could max out both if you can afford to live on what's left. In which case you have to do the 401k.
If you're going to stay longer than 5 years, then it's a no-brainer. You can't leave an instant 25% return sitting on the table. It may not be free money, but it's money you're not going to get if you don't participate.