I like character contributions in concept, but don't usually use them in my campaigns.
My problem has to do with the demographic of my game group -- wife, sister, my kids, and a few friends. This particular group is very diverse in terms of how much they are willing to prepare for a game session, which means that a couple of my players would get a huge benefit while other players would resent their lack of benefit.
Now, the true Amber attitude would be to say "so what -- if you don't work you deserve to get the shaft" but all that would do is alienate several of my players rather than motivate them to work harder. I'm a good judge of my players and would hate to tear up the game group over such things.
However, if I was playing with a more traditional and more age-balanced group (such as back in college) I would have played up the contribution aspect of the game to the hilt. I think that it's a great idea to reward those who invest more into the campaign because their work and ideas also make my own job as GM that much easier.