I LOVE participating in online contests because I learn what agents like, whether it be in the form of pitches, first lines, or queries. I have an opportunity to get my stuff in front of an agent who often isn't accepting unsolicited material. I can see what else is out there, fix my stuff based on comments, get my writing out there and noticed.
I HATE participating in online contests because my writing is out there being read by the whole world, naked and bare for all to see. Critiques/comments can hurt, and there are some pretty fearless people out there who aren't afraid to tell you what they really think. If I (when I) lose or fail, everyone knows it...it's like they have a clear view into the rejection folder in my query inbox.
I have received a number of requests from online contests, so I do think they are worth my while. Even one of my CP's landed her agent through an online contest, so I know it works. It's still hard to put yourself out there, though.
A few sites that have contests regularly:
What other contests do you know about or participate in? Do you love or hate them?