I was a contractor for 4 years before going back to perm mainly because of health insurance costs (I'm in the US). One of the troubles I had switching back to perm is that my future employer looked at my resume and saw me as a "hopper" since most of my contacts were 6 months to a year long. Luckily I had a friend already working at the company that put in a good word for me. But this experience made me think twice about doing contracting again. This is really the only negative thing about contacting I've encountered. It's a great way to be introduced to a variety of different environments and get a large bump in pay.
On your resume, you can list the name of your contracting "company", even if it's just "Sakopov Software Consulting", and consolidate all the client work into that entry, rather than separate resume entries for each contract. That mitigates the "hopper" perception and also gives the reader less noise to process. Obviously you'd still want to list recognizable client names prominently if possible.
