For adults who have participated, it's better than the nonparticipants, hence a certificate to that effect is ok. For those who have really done well and have come just below the top 1 or top 1-3, then a certificate of appreciation certainly good as they are worthy of it. For kids both are good, for adults appreciation is better than participation and obviously, participation is better than being in the audience.
Do what inspires you !!
Usually children and even many adults will be shy and hesitant to participate in an event especially when it is of of competitive nature. As small children do not go by the value of the winner prize but are simply satisfied if they get a chance to be on the stage and get some prize or something like that of the winner. So usually in events for small children everyone who participates in an event are also given participation prize. It may be a toy, soap box, a pencil box etc. But if the winner is given a certificate, then the participants are also given Participation certificate. This satisfied the parents also who come to witness the events.
For the young adults, participation certificate is a record and memento t keep as memoirs and establish or self satisfy that they were active participants.
However in many events,especially the professional events, participation is rewarded with cash , though to a lesser extent according to the levels reached before elimination.
If there is no sufficient participation the event loses its attraction and credibility. So participation is very important. In order to encourage participation, participation certificates or participation prize are necessary.
I was one among those who suggested participation cash credits for the contests in ISC. It is nice to see that nowadays in many contests apart from the winners, participants also get more points and/or cash credits.
For one who has not yet participated participation is immediately important. For one who has participated, quality performance is important. Both need to be recognised and acknowledged. They can be certificates or any other way - like cc in ISC.