It's another way of playing the game... except it isn't, because you still need to beat Gyms and the resident evil team like any regular trainer.
Contests never appealed to me, though. They require messing up movesets (or wasting time training up Pokémon specifically for contests... by making them win Pokémon battles, ahem), and you don't get anything out of them. I came here to make my Mons fight other Mons, not to prance them around.
Judging from the number of people I've seen who adore contests, I'd say there's a market for them, but to make a proper game based on them would probably require too many changes to the game (e.g. change how they level up, learn moves, their abilities, etc. etc.). This will have to be left as an exercise for the ROM hackers.
