I'm hesitant mostly because I think contests are a waste of time. Among all the other things that can be said about them, the most important (IMO) is that they don't test your viability in the marketplace. Only submitting for publication does that. (A contest that offers publication as the prize doesn't truly test your viability either, because it's a closed pool of applicants. Offering publication to the winnner is not like selecting a manuscript on its own merits.)
I've never seen an S&S contract, but I assume its boilerplate is fairly similar to the boilerplate of other major publishers. No, it's not bad--certainly not in the way that contracts from amateur micropresses and scam publishers can be bad--but it's weighted to the publisher's advantage, and a good agent would do all s/he could to negotiate it so that things were more to the writer's advantage--for instance, holding on to certain subrights, or making the publisher agree to re-negotiate your compensation if it exercises certain subrights itself rather than licensing them.
The contest rules say that the winner must agree to sign S&S's standard contract, and do it within 5 days of receipt, which I imagine is S&S's effort to cut down on the possibility that the winner might try to negotiate him/herself, or use the contract to find an agent to negotiate. Even so, you might be able to work with them to change some things--it would be worth a try.
Edited to add: don't rely on impressions (most of you who've posted so far are wrong about the procedural details), or even on what people like Miss Snark and I say. Go to the contest itself and read the rules word by word. That's the only way you'll properly understand what you're getting into.
- Victoria