I can't let undead threads rest either...
Last session one of my players traveled deep into the fey-wild, into an area that I had not prepared, because I had not anticipated this action. I winged it a bit, and then when he finally reached the heart of the forest, I decided to end the campaign there for the evening. I flat out told my players that I would need time to prepare the next area, because I wanted to do it justice. When you're near the end of the session, that is an easy solution. If it happens mid-session however, you'll just have to improvize. That's what most DM's do... right?
I never feel like I need (or want) to keep my players on a leash. However, I know that when my players visit a new island or city, that I only need to prep that particular location for that session. It is unlikely they'll venture outside of that area. It's not about giving your players "the illusion of freedom", but about giving them absolute freedom, and prepping ahead. And yes, I prep A LOT.