I'm using topica email publisher to get my contestants into a database and confirm that they accept receiving email for the chance of being in a contest. It costs $24.95/month currently, but it is automatic and painless. Each month everyone must sign up all over again to participate. I currently get between 700-1200 people signing up per month but only about 200 of those are not already in my database.
See my rules at
http://www.discount-leather.net/Rules.html and feel free to use them and modify to fit your specific contest. I got these off of a site that I co sponsored a contest with and modified the content.
Contests do work well, however, getting the various contest sites to list your contest can be pretty tough. A lot of these sites receive commissions or kickbacks from the National Contest people and they tend to give a lot of weight to those contests. Also, all want a link back, however, if your contest grows and becomes popular, you don't even have to worry about a link. My contest has been picked up by lots of sites that I didn't even know about.
Maybe I go about it wrong, but all my newsletters are geared towards the contest first, and advertising second. I do see spikes in sales after a mailing so the advertising must be doing something.
Anyway, that's my help for whatever it's worth.