Yes, I do cage my lovebird. This is because there are simply to many dangers leaving him outside or flying around the house. We have fans, vents, candles, air fresheners and other things that he shouldn't be exposed to. I feel that keeping him in the cage is the best way to keep him safe and happy. He has plenty of food, water and toys. He chirps happily all day and loves it in there.
I also clip my bird's wings, as he has had them clipped all his life and doesn't know how to fly. When he tries, and has his flight feathers, he spirals down and I'm so afraid he would get hurt.
PLEASE do not set your birds free! Pet birds CANNOT survive in the wild. They lack the survival skills that their predecessors have developed over many years. They will die most certainly. If you don't like the idea of a cage, how about an aviary? You can set it up outside and there's plenty of room for your bird to fly and have fun. I personally could not do this as I don't have a backyard, but it is a great option for handy people who want the best for their birds.