My Design company charges over $1200 for a logo design, and we have more work than we can poke a stick at. Most people are smart enough to realise, "You Get What You Pay For".
For some people starting a business, $99 is all they can afford. Of course if your starting a business and all you can afford is $99, well your probably under funded on capital to really make the business a success in the first place.
Just this week I had a guy call me, I gave him a quote, and he mentioned the $99 / $200 options floating around out there, and after some discussion, he went with us anyway, even though we are in excess of $1200. IF you have a good product and believe in it, people will see the value.