I was wondering about adding ads on one of my decent looking sites with about 400-500 visitors/day (95% organic traffic); on the other hand it is receiving a good number of back links and ranks well for 4 popular keywords.
The website consists of only 5 pages. If I put up ads, I think it may earn up to 30 bucks/month max.
Well your expectations seem realistic unlike the characters who seem to expect to make a living by putting adense on a site that gets daily traffic barely out of single figures.
A lot will depend on how well targeted the ads are to your visitors, as opposed to being targeted to the keywords on your site. By way of example I have a local music site. G targeted ads on the venues page to the locations so ads there ended up being for local plumbers and builders which didn't get clicked. The gig listings got ads for festivals, clubs and performers which a few visitors actually clicked on.
I would say that it was worth trialling but probably not worth the effort of tweaking the site if G doesn't serve the ads that you need.
I recently re-launched a website and made it ad free. It has higher traffic and many more pages than your site. For me it's a long term project and putting up adverts makes it harder to acquire links. Although it won't generate any money for a while, I think making it ad free is going to be more profitable in the long run. It's hard to say what you should do... it depends upon your objectives.