Oh, and possibly ones that have lifetime warranty and would fit $500 budget, hope that is not asking too much

I did a bathroom remodel last year and went with the freestanding after my plumber told me numerous horror stories about wall-mounted faucets. I purchased mine from Costco for around $499 and it has been wonderful. I use it often and have had no problems. Admittedly, the attachment does dribble a little bit and I find myself having to lay it in the bathtub for a few minutes before hanging it back up. Best of luck!
http://reviews.costco.com/2070/11644914/new-waves-new-waves-athena-freestanding-bathroom-faucet-reviews/reviews.htm?sort=reviewTextLength&dir=asc

Oh how did I not think of costco? do you know what their warranty for this faucet is? I have not heard of the brand. also, did this come with the rough in valve already or did you buy that separate?

Amy, i did try to see if doing a pony wall would work but I can only imagine my contractor telling me he will charge me more for it which isn't probably worth $500 I am trying to save. we will be tiling the whole three walls surrounding the tub though so it shouldn't be a bad idea to do an extra 4" wall on pic 3. Deck mount faucets are the cheapest way to go but afraid too that if I have to change a leaky faucet, how does one get access to it without breaking apart the tile? I guess that is the same issue with shower faucets...

If you're tiling the walls, then option 3 is only adding the cost of a few studs. You will have the issue of a potentially leaking faucet no matter how it is mounted -- the floor, a deck, or the wall. My understanding is that the leak doesn't generally come from the pipes or the pax in the wall, but the faucet itself. If you choose a faucet with brass innards instead of plastic, you should get a very good warranty. Faucets with plastic innards usually have to be replaced after 5-7 years. You'll have more options with a deck mounted, preferably one that matches your sink and shower fixtures. One thing I highly suggest you splurge on is a hand shower. It makes cleaning the tub so much easier. They are also fabulous if you ever bath a kid or a dog in the tub.

ok, thank you Amy! I will go for waterfall deck mount if my contractor says no big deal on doing an extra work.
DMF, I checked and costco no longer carries this item, I also called Ove Decors about warranty, they said only one year. Not quite what we are looking for. We were so happy with Moen and Kohler with their lifetime warranty after 7 years, our kitchen faucet leaked on us and Moen sent us a new item and a better style since the one we had was discontinued. I would rather pay for a deck mount functionality and warranty than style, i wish I can afford to do both with the fancier free standing ones!

So I just wanted to update, I found a free standing faucet from Hudson Reed on sale! It was originally $799 and it now only $449. I was able to get coupon of 5% off as well, it was less than my budget, has free shipping and no tax! I do however had to compromise with the lifetime warranty, they have 10 years warranty and that was well enough for us. We figure, we can buy a new one in ten years if it breaks and it would still have served its purpose. Here is a link for those who need a free standing faucet that isn't over the roof pricing.

http://usa.hudsonreed.com/single-control-thermostatic-tub-shower-faucet-floor-mount.html

How did the Hudson Reed free standing faucet work out? I'm reading mixed reviews about them.

pratth, so sorry i just saw this now, it's great so far! It is a little tall for my free standing toto soaker but it works well. I found that if you let it drip on tub before putting it back on the stand, you won't have any drip issue. I also just wipe it off clean after using because I ordered a chrome and it would always have water residue marks, but so far so food!

Hi, I need a tub next to the wall of my small bathroom. I was looking at a freestanding pedestal tub. Does this need a minimum amount of clearance from the wall to facilitate cleaning the tub? I will need wall mounted fittings/filler because I am not allowed to chip the floor in my condominium unit. Thanks.