We'll definitely be doing more there. There's a lot of talented people doing this work for fun and/or on the side to build up their portfolio. Not sure how long this will last for these low prices, but I definitely recommend taking advantage of it while it lasts.
We paid for logo work at about the same price from an online company and got something passable, but had worries the whole time that we wouldn't get anything good at all.
In the end the 99designer winner even sent us the raw Adobe illustrator files, etc. The pro firms I saw were only sending the SVG for artwork, but the raw source is even more useful if we need to transform things down the line (and helps confirm it's an original work).
Not sure what the quality will be for website design, but the logo design side seemed to "crowdsource" amazingly well. YMMV.
It's working for spec on the off-chance your designs might get chosen. THe odds are stacked against you and the competition devalues your work. It's the type of thing that is historically rampant with IP theft, abuse, underhanded tactics etc.
Designers should not be working on spec; ever, especially college educated designers. It's tempting to get these projects under your belt for the experience and the portfolio but once you go down that path, it can be hard to raise your rates up to a liveable wage when everyone else is working for free or cheap.
If you're good and can market yourself you can always find people to pay the rates you want. If you are missing one of those things you wouldn't be getting the rates you want anyhow. Your work is worth exactly what someone is willing to pay for it. If you can't find people to pay what you want then you are overvaluing your abilities.
Some day I hope to start up a bunch of huge computer labs throughout SE Asia and Africa so that kids can come in and do custom programming and graphic design, undercutting all of us Westerners. I'd rather have disadvantaged teenagers drawing little icons for $5 a hour than working as hookers to get $10 a night--even if it means that designers in the US won't be able to afford to live in downtown S.F., drinking $6 cups of coffee, and buying $5K of gadgets every year.
Some people have natural talent with design. If you find you aren't one of these people, just get someone else to do it. I've had great experience with crowdspring and it is very good value for money. The best part about these two sites is, you get to choose the best design and give the designers feedback for further iterations.