I’ve been an iStockphoto user/contributor for some time now (portfolio). These threads about low-cost stock photo sites “ruining the industry” crop up from time to time. I think it’s just FUD.
iStockphoto (and similar sites) fill a niche. Period. “Professional” photographers who have dealt with the “high end” agencies will be able to determine which solution works best for them. Likewise for the consumers who purchase the pictures. If they need super hi-res for a large-format project, most of the material on iStock wouldn’t be suitable — they’d need to use one of the other agencies to get the higher resolutions. But if all you need is artwork for the web or normal print work, iStock is a nice, affordable alternative.