My thoughts on blog carnivals is that it increases both your visibility and link backs.
Visibility:
If a larger site (one with some decent traffic) host your site, and you submit a great and attention grabbing article, there is a good chance that other bloggers and reader will start to follow you. I speak from experience in this matter because this is how I learned and read a lot of blogs before I started blogging myself.
Links:
You get a link from the bloggers that choose to host a given carnival, and when you host a carnival you get links from the submitters to your page. This is a rare win-win scenario for both the carnival host and the submitters to carnivals, at least as far as search engines are concerned.
Carnivals the and the use of them becomes easy after the first time. It's intimidating the first time, but after that it's a breeze.
Bests!