Free version of Arc2Earth is now deprecated, and full version is $600 so no longer fulfills the needs of the original post (free, but retains attributes).
I also have a similar problem where user-created attributes from a tablet app are being stripped away when imported by the KML to Layer geoprocess tool. I hear the Data Interoperability extension has the Quick Import tool which should retain the attributes, but that again does not fulfill my needs (free).
I looked into QGIS/OSGeo4W and have read forum posts which say it should retain attributes based on GDAL 1.9.2-2 but after grabbing the latest OSGeo4W install today and trying it, I am still not seeing those attributes show up.
I have run a trial of FME and Arc2Earth and both were able to retain the custom schema on conversion, but both of those software packages are prohibitively expensive for a one-trick-pony need of KML->SHP/GDB.
So the original question still stands; how can user-created attributes in KML files be brought into ArcMap v10.0 for free?