I've read a story about a similar system in Prauge. I can't remember the details to well, but I think that the bikes were free to use, and the program was funded by the city.
The same type of system was attempted on the west coast of the US in the past ten years, I believe it was called the Yellow Bike Project, (can't remember which city attempted it) they collected old bikes, restored them too working order, and sprayed them with yellow paint. The program was dropped due to people stealing the bikes and abandonning them outside of town.
I'll try to dig up some actual data to validate all of this hearsay.