Contests can be a fun way to break up your submission routine. They can also provide opportunities to submit your work to agents or editors who may be closed to submissions otherwise. Obviously you need to read contest rules carefully. There are also some other things it is imperative to be aware of when entering contests:
Realize that whatever you send in as your entry is subject to being posted online. As hard as the people who put on contests work, not all contest rules are clear. Be sure you are okay with whatever you send, along with your name, being made public.
Unless otherwise stated (which is very rare) your manuscript must be complete—written, revised, critiqued, re-revised, re-critiqued, edited, etc. Your manuscript needs to be absolutely, completely ready for submission to be entered in most contests.
Just because an agent or editor is participating in a contest does not mean they have been vetted by the person putting the contest on. Always do your own research into each person that makes a request to see your work. Most contests have a number of agents participating. If you get a request from someone you are not interested in working with you are not (usually) obligated to send, but even if you do, there are always many details to work out in the case of an offer and you never are obligated to say yes.
Many times the agents participating in a contest are open to submissions. Consider whether or not you and your work be better served by submitting through regular channels.
A contest submission may or may not equal a submission to a specific participating agent. This will vary by contest and agent so use your best judgment. Pitching your manuscript on twitter, for instance, does not equal a submission.
Contests are fun and can be really exciting. Everyone likes winning!
But it helps to remember that, no matter how good it feels, obtaining representation or getting a publishing deal is a business transaction. Keep your goals in perspective. And good luck!