In my experience, practicing for competitions like GCJ, Topcoder help a LOT in two ways.

1. Raw coding skills - You'll reach a point where what's in your mind can be coded with very few stupid low level coding bugs like syntax errors, mis-assignments, initialization errors and such. Obviously this doesn't help with higher level issues like program design etc..

2. Algorithmic skills - You'll get VERY good at analyzing algorithmic complexity. You'll thoroughly understand common data structures like lists, vectors, trees, hash maps and other common algorithms.

Both these things are very much relevant to real life programming.