Well for me, as I'm not a commercial artist, this kind of competition is fine. I'm going in with my eyes open and actually according to the rules, if my design doesn't win (which, let's face it, is highly likely!) then I can publish it elsewhere. (Ie the IPR reverts back to me). So for me, it's just a few hours spent coming up with the design which I wouldn't have got any money for anyway.
I can see why you wouldn't want to do this though.