I've just read the article below about photography contest scams.
Given that this article was originally posted in May, 2005 and it is still receiving comments in November 2007, it is an issue that is not disappearing.
One of the main sites mentioned is photo.com (deliberately not linking to this site). If you are 'lucky' enough to get through to the finalist section of the competition, you will be invited to their gala for about $1000. You are also invited to order the 'coffee table' book with your photo in it for about $60. All this isn't bad, but the small print of the contract you sign you waive all rights to your image. In short, you should stay clear of this very expensive scam. Apparently, you will get your book eventually, but it may take years.
Some comments mention that bananabana.com is running the same type of scam with baby pictures.
There is mention of another scam involving stock photographs on a CD but I do not think this kind of scam catches as many people out if the comments are anything to go by.
In conclusion, if you are going to enter a competition, read all of the small print. If you have to pay to enter a photography competition, make sure it is as legitimate as possible; the Photoethnography article mentions that these competitions sometimes name the judges so you can research their credentials.
Thanks to Clockworkpink2 for linking to the original post.