That's only a problem as long as ad funded versions exist. Get rid of the ad funded versions and it's no longer a problem, as the non-ad-funded versions will no longer have to compete with them.

Plus, many useful services will still have free versions, and then provided paid upgrades.

Plus, many useful services will stop being centralised, distributed, free, peer to peer versions will be created that cost nothing to host, and they will be popular, because there are no ad-funded versions to compete.

That's a false dichotomy that assumes there are only two solutions, ads or a paywall. There are other solutions, including ones that haven't been invented yet.

I will happilly pay for the service, as much, as advertisers earn on me. Sounds fair, and I doubt it will be a large sum, based on how often I click on ad's.

There are many different kinds of paywall. Some sites have early access to content and the ability to comment only for paying users. Others have just one simple ad on the page, that is controlled by themselves, not a third party network.

The lovely thing about the internet is that there is an ever-increasing horde of people who will put their content out for free. For each purely ad-dependent site that goes, several sites - from free to paid - will take their place.