The question of free or cheap is important, but not why I would not submit a design to a competition like this. (I'm not a "designer," so what follows are simply general remarks about my personal experience with things like this.) Software design of all types, including UX, is an attempt to solve a problem given a set of constraints. There are thus three things involved: 1) solving, 2) the problem, and 3) the constra…
Spec work is a good way to quickly and cheaply solve a simple problem where top quality is not the primary concern.
Many problems (and I would agree that the Skype UI is one of these) are more complex and require a more specialised approach. The latter is where top designers spend all of their time anyway.