I have a YA books review blog (see Bites in my signature) that I give books away on all the time, both from my own collection and offered up my publicists as a means of promotion. Considering the majority of books are picked up via word of mouth, having a contest is an excellent means to spread that word.
Every book blogger works differently. Some (I consider them shills since it appears that all they do is have book contests and don't do much else, but that's just me) will have a contest for anything because it boosts their site numbers, regardless of whether they like the book or not. That also, in turn, gets them more attention from publishers and publicists and gets them more review copies and more chances for blog tours and promotions and such. Then there are those like me that only give away books that I can put my stamp of approval on. I won't have an author on my blog to promote their book unless I've already and it and liked it. I did that once (agreed to a promotion without reading the book) and I ended up not liking the book. It was awkward. So no more gimmegimmegimme shilling for me.
For the most part it's good for the blog and really, only if the blog has a decent following will it be worth while to offer something of your book on the blog (for instance you don't really want to promote on a blog with 28 followers and 1000 hits after 4 months of being up). So you hit the big blogs (and please, as someone that's been hit up to review books in the vein of The Clique even after my "Alphas Blows Ass" review, target your market, only hit up blogs that fit your book's genre, send emails, don't comment as that's viewed as spam, personalize the emails so we don't feel like a number in your promotions machine, things like that) or those that you feel would benefit your book the most. It required some research on your part but it will pay off.
Sean Beaudoin's publicist targeted me for Sean's most recent book Fade to Blue and he hit the nail on the head with that one. That book fit me to a T because the publicist took the time to get a feel for what I liked, read some of my reviews and took the chance.
So yes, it's mostly beneficial for the blog but word of mouth is a very powerful tool for books. Just don't inundate the book blogging world. Ugh. I hate it when that happens. Over the summer something like 20 different blogs were running blog tours/contests for the same damn book. I was so overkilled on it that I didn't even want to read it. So yeah, balance is a good thing too.