I'm a designer working full time in a graphic studio and doing occasional freelancing. I've been winning identity and packaging contest on this site since the month I signed up and those are my thoughts about it: A designer can make some money out of this site provided that she doesn't do much research beforehand and goes with first, obvious, mainstream ideas. Cliché is given applause. Too many dots to connect is not welcome.
I've won with designs that made my boss, an art director with a fine art degree and 25 years in the advertising go 'meh', and got eliminated after submitting great, creative designs made after hours of research and brainstorming. To have good work rejected and get paid for mediocre work is well, kind of disappointing.
Company owners who use this site instead of finding a designer in their area don't care for design much, really. They just want a pretty picture. There are exceptions among the contest holders, though. Companies just starting out and on a tight budget, who will very likely replace the place-holder identity from 99designs within a year, if they will survive that long. Then there are ones who don't know any better, but have time on their hands to guide designers (well, pixel pushers in that case) to a decent solution.
Design quality seems to be slightly better in the platinum category, but there are platinum users who do design below site's average and basic users who do better than platinum but just didn't sign up to platinum verification.
Another issue is the business model 99designs has that is hurting designers both on and off the site: every designer on 99designs works on speculation of getting paid, which basically means free work, unprotected with any agreement until (maybe) awarded, which means contest holders can save the propositions and cancel the contest, share the insights a designer has made in an attempt to sell her design in public comments and to promote/rate high on copycats. Faint chance of winning a contest a designer is really interested in, means having the urge to join mare contests, spending less time on each one. The result being lower quality work and giving the designer profession a bad name.