Is creative commons good for copyright holders and market competition?

It depends on your goals.

If you're a professional photographer, for example, and your goal is to make a living and put food on the table by selling and licensing images, Creative Commons would be a bad idea for you. If you're a hobbyist and just like the idea of your images getting out there, Creative Commons is perfect.

The argument could be made, then, that it's tremendous for competition: in order for Joe Pro to license his image for $100, it has to be $100 better than Fred Flickr's comparable CC image. Ideally, Joe will challenge himself to improve, leading to better options for the consumer. The more likely outcome is that Joe will complain a lot and eventually start teaching photography at the community college.

One side problem of CC is that users have become used to getting anything they want for free and right now; when Flickr doesn't give them what they need and they end up at istockphoto or whatever, they're flabbergasted by rates which are, in the grand scheme of things, entirely reasonable.

The long and the short of it is, as with just about any copyright question, it depends.