Isn't it all the more galling for them to see UK government initiatives encouraging businesses to treat them as cheap, disposable commodities? For the record, I think 99designs or Wordpress templates are fine for most small businesses who shouldn't and won't pay more.
But cheap customers are often better than no customers, and a friend of mine picked up some of his larger accounts starting off with some loss leader logo design promotions.
From a designer's point of view yes; just because it doesn't really matter to Bob's Plumbing whether they get the logo done cheaply by their local print shop or get 30 designs by Filipino teenagers doesn't mean their local print shop is going to be delighted at the loss of £200 revenue and a chance to upsell some business cards. Especially not when the site purports to be encouraging an "enterprise-led recovery" for the economy
They also might take exception to the notion that race-to-the-bottom logo work fits under the site's "creating a brand" heading; 99designs is exactly the resource for businesses where visual branding doesn't matter much (which in fairness is a lot of them).
But cheap customers are often better than no customers, and a friend of mine picked up some of his larger accounts starting off with some loss leader logo design promotions.