In theory, computers can recognize text from images, but to do so reliably they have to have a clean, crisp image. This is why many CAPTCHAs use distorted images like wavy letters or a background with a strong pattern. However, some humans also have trouble distinguishing the letters and numbers in an image that is too distorted. If you are having trouble making out the CAPTCHA on a sweepstakes entry form, try reloading the page to see if the next random image is easier to read.
The letters and numbers displayed in a CAPTCHA image are random. They do not have any influence on whether you will win the sweepstakes or not, as long as you type the proper string of letters and numbers so that your entry is accepted. Don't worry if you make a mistake, you can usually go 'back' or reload the page to get a new chance the enter the CAPTCHA.
For more information, check out Daniel Nation, the Guide to Web Trend's article, Why Do I Have to Type Those Crazy Letters?