i would argue this isn't a 'free market' problem as professional designers are probably tackling a different market altogether (pricewise and customerwise). Instead, i think the problem is that 99designs hurts the public image of designers in much the same way that rentacoder (and to a lesser extent, topcoder) does.

Which is to say that the problem with these spec websites is that they commoditize design (and coding) work in a way which devalues the process behind the trade, which is arguably what you're really paying for.

And say what you will about the quality of the end product, the damage is that people walk away with the idea that design or programming or whatever is not getting there it's about the destination. For a reason why this is a bad idea, look at why people wax poetic about 'thoughtful design' or any of those sites that focus on the details.

It's not that these sites are actually bad and for someone who wants an aesthetic facelift, i'm sure these are often 100% useful, but the utility and the domain of applications where something like 99designs is pretty limited, so i guess you get what you pay for.