It was a big trend in early 2000s too. Microsoft, IBM, and a many other big companies did that to keep a flexible workforce (and allow layoffs without alarming stockholders).
The good side is that without experience, it's hard to land a secure FT position, and contracting/interning can get you that experience. Do good work and you can look pretty good. Plus there's the extra pay, but in my contracting experience, you do need it for the layoff times or for vacations, which you pay for. You get to bill hourly, which can add up to a lot of money if your travelling to Asia and places like that. Overall, IMO it does give people experiences in places that just can't add another full time employee and would ordinarily be inaccessable. Some stay on as contractors permanently as it gives them more flexiblity
Bad side, you are not like the people you work right beside in the office though you are often doing exactly the same thing, and it can mess with your mind. You don't have benefits, employee rights & privileges, security, etc. One place I worked at wouldn't let you join the sports team with your colleagues, even if you had been working there for years. Another didn't allow corporation cash rewards for patents/design awards while FTers with minor roles did . You couldn't go to company lunches, or events. You can be perceived as a 'less valuable' employee by some.
You have to balance your opportunities available, your experience, and what you need to get where you want to be.. then choose accordingly