I had the exact same experience. I worked for an open source company that had bounties and I think it was one of the major factors that completely killed the open source community around it. A few years later a friend of mine mentioned she had contributed to the project, but stopped after she worked on something for 10 hours and realized that worked out to about $10/hour.

However, it seems like a good model if it gets up to market rates (if someone could do this in an hour or two) and especially if it's something developers wouldn't do on their own.