I posted a blog on how to shortening the URL using the TinyURL and KrunchURLin few weeks ago, I believe these are the more common use and famous by providing the URL shortening.
But actually I do find out there are plenty of web site which may help you to do itfor free. Some of them even provide the bookmarking features, some are difference in term of the lenght of the url they allow to hide.
The following are some example that I found on the internet:
Ruby URL

URL Cut

TubeURL

Shorl

Fhurl

dwarfURL

doiop

Zip My URL

Yep It

URL Snub

SNIP URL

moo url

Metamark

Easy URL

Dom. IR

A2N
