They're definitely a perverse incentive in terms of getting quality output, but in terms of writing practice I am not so sure. Certainly each additional paragraph is harder to write than the last, and my intuition tells me that this means that a medium-length paper provides some kind of practice/mental workout that a three-paragraph post does not. Of course it depends on how much fluff and bullshit your particular instructor allows in an essay (not that bullshitting isn't also a useful skill).