"you'll be doing the whole design community a favour by not asking for free work."
This is a free market. Supply and demand. If people are willing to do quality work for free, let them. If someone is looking for quality work and they find it for free, they should take it. Doing a group of professionals "a favour" does not enter into the equation.
"If someone came to this community and asked to build them an app for free they would get shut down."
That's because no one made millions because of a logo. Apps are simply more valuable than logos, period. And they require more skill to create.
I have to disagree with you, saying that making a web app takes more skill than designing a logo is simple not true. Both developing web apps and graphic design are highly skilled professions, graphic designers can take years to develop the expertise to design something truly great just as it can take years to develop the skills required to develop successful webapps.
Your logo is the single most important part of your brand and it drives the graphic design of the rest of you website. It is true that anyone with a little time can create a logo by choosing a typeface adding some colour and a drop shadow but making a logo that tells you something and holds a message is much much harder. I would be tempted to say that logo design is probably the hardest aspect of graphic design to master. For an example of a very clever logo that hold a hidden message take a look at the FedEx logo, see if you can spot the hidden image. Designing both a logo and a webapp are about knowing the audience and what makes them tick.
With that said something like 99 designs is actually a good way to get a first logo for your webapp. You can always iterate on the logo when you know the market is ready for your app, just don't underestimate it's importance.
I agree with your first point in as much as people are free to work or not work as they please. That said, here's some perspective from the design side which may help you understand how designers may think about these kinds of things, even if you disagree or find it a touch extreme: http://www.no-spec.com/faq/
As for your second point, how much would you say the brand equity of Apple, Coca-Cola, or Nike is worth? They would simply be selling electronics, sugary water, and shoes if they didn't have design and marketing experts building and executing their brand (experts who I'm sure have been compensated quite handsomely). While I'll agree that it's easier to "throw together" a logo than a web app, good design does require reasonable skill, training, and experience.
ADDED: I guess I should be clear that I'm rebutting the assertion that design is necessarily less valuable than software development, not that startups require Fortune 500 branding.
"ADDED: I guess I should be clear that I'm rebutting the assertion that design is necessarily less valuable than software development, not that startups require Fortune 500 branding."
It's possible to have a very successful web app with no professional design. Look at Craigslist.
It is impossible to have a successful web app that consists only of design and not the underlying code. I'm not saying that design is unimportant, or that it can't make or break a product, but you can't with a straight face make the assertion that it's as important as the product. It's the icing, not the cake.
In the early stages of a company, the logo contributes very little to the company's success. All it does is signal that the company is somewhat professional. It requires little uncommon expertise to achieve this goal.
The comparison to Apple, Coke and Nike isn't applicable. You're describing a different product than most startups are looking for.
Many of the issues no-spec brings up (ie: mostly misleading the designer about potential reward) are not present on 99Designs and contest sites, as people knowingly compete in contests for exact terms up front, not for potential jobs.
The brands you mention are priceless, but the logo is not. Nike's logo was cheap as hell, for instance.
99Designs serves a completely different market, and I think the "How much is a F500 Company's brand worth?" argument HEAVILY confuses marketing, design, branding and advertising.
The last time I checked, Fortune 500 companies weren't shopping for logos on 99designs.
"They would simply be selling electronics, sugary water, and shoes if they didn't have design and marketing experts building and executing their brand"
We're talking about logo design for startups, not marketing strategy for large retail corporations. Apples and oranges.
"good design does require reasonable skill, training, and experience."
I absolutely agree. It takes a lot of skill to be a good designer.
You are confusing logos and brands. Branding is not something that can or should be rushed. A branding process includes so much more than just a logo, and can cost thousands or millions.
The best comparison might be a white plastic yard chair and a vintage leather Eames recliner with matching ottoman. You can sit on both chairs.
It isn't too hard to make an app generator that pumps up generic apps in a similar way that icons can be made by slightly tweaking another preexisting icon.
The value with apps is much the same as it is with icons (or design, in general); in how unique and well thought out it is, how well it applies to what you need it for.
This is a free market. Supply and demand. If people are willing to do quality work for free, let them. If someone is looking for quality work and they find it for free, they should take it. Doing a group of professionals "a favour" does not enter into the equation.
"If someone came to this community and asked to build them an app for free they would get shut down."
That's because no one made millions because of a logo. Apps are simply more valuable than logos, period. And they require more skill to create.