Where I work now, we have two H-1Bs in our dev group of 12. Both are outstanding workers, and "legitimate" in that the company made a good-faith effort to fill the positions with Americans, but wasn't able to find people with the needed skills. Both are also paid at what I would consider to be an appropriate wage comparable to ours, and HR takes good care of them and makes a real effort to abide by both the letter and spirit of the law. This is how it's supposed to work.
Having said that, I've also worked at places that brought in H-1Bs in preference to American workers, even when the domestic workers were more qualified for the position. The reason? Money. At one place I worked (dev group of 14 with 4 domestic workers), the highest paid of that group was at about my experience and competence level, yet was paid less than 2/3 of my salary, and the company made it very clear to all of them that if they didn't toe the line, they were welcome to go right back to the five different nations they came from. Of course, personal experience doesn't mean it happens everywhere, but I've seen it enough to believe that there are a non-trivial number of employers that are in fact abusing the program.