Yes, you are able to create another site in your account using a free subodmain without any problems. But please note that you have use the same database for your two sites. Because our Chocolate plan allows you to use only one database in your account. More information about our plans you are able to see following the URL below:
http://freehostia.com/compare-hosting-plans.html
If you want to use separate databases for your sites. Please navigate to the Control Panel Add Services menu which is situated under the Upgrades section. From there you are able to buy the additional database.