It's true that there's a wide spectrum between crappy jobs and jobs that engage your passion. My suggestion is to aim way down at the far passionate end of that spectrum. But anything down towards that end will be better than anything up at the other end, and may well pay more.

I disagree, though, on giving labor away for free. First, it isn't free--it's in exchange for contacts, experience, and the chance to live your dream. Second, it's an incredibly powerful technique that a lot of people don't know about (and that a lot of other people can't take advantage of because they've got bills to pay), and that gives you a huge leg up on the competition, giving you a chance to get into awesome situations that would otherwise be closed because you lack experience.

Arranging things so that your passion--your true work in life--is also your day job, is probably the best single step you can take toward making your life a happy one. Compared to that, a bit of pocket money is of insignificant value. Of course, if you can get both, so much the better.

I recommend this test: In the first few weeks at a new job you ought to be saying to yourself, "I can't believe they're paying me for this. I hope they don't find out that I'd do this for free, just because it's so cool." If you're not, then I don't think you've found your passion. I was, the first few weeks at my first job.