I'd like to know how people use level 3 contacts. Specificly, I'd like to know how people make them worth the 200,000 nuyen cost.

Te way I see it, there are two ways to do it. Make a Friend for life someone who will never turn you down and never cheat you. The problem with that is that every problem starts looking like a nail. Lets say A. Random Mercenary has a Army supply Sargent contact . He might use him to get classified military hardware when he needs heavy firepower, its only reasonable. He would also be tempted to use him to get access to military hospitals, since A. doesn't have any street doc contacts. This is less reasonable. The supply Sargent might be able to call in a few favors and get A. medical tratment, but he probably can't. Furthrmore, if the Sargent gets caught selling military weapons, he'll be court-marshaled and imprisoned, so . A. Random can't turn to him for weapons for every run.
In this case, 20 Buddies would be much better than 1 Friend for life. A. Random could have 5 each of doctors, fixers, and intel mines and still have 5 contacts (or 50,000) left over.
A. could try to offset this by making his contact powerful, say the Secratary of the Army insted of a mere Sargent. This presents even more problems, as it give A Random Mercenary, not only the ability to request airstrikes, but also the ability to influance the UCAS Joint Chiefs od Staff and, by extension, the entire UCAS military. A PC with the ability to start WWIII usualy isn't good for game balance.
One would have to strike a delicate balance between the contacts usefulness and reason.

The second method that I can think of, perhaps a terribly foolish method, is to make said level 3 contact a terribly munchkiny character and use her to pull your character rear out of the fire on very rare occasions. This is the method I'm trying to use now,
Jake is a very charsmatic and slightly PI who uses social skills and surailance gear in his work. He doesn't have much combat skill, but can handle a pistol and a handblade. Kira Yugo is his childhood sweetheart and former buisness partner. She is a Physad Initiate who can kill a troll by slapping in his general direction. She was taught martial arts by her grandfather and led a biker gang (what passed for one in the subburbs) but took a vow a passificism after loosing a duel with her grandfather and being forcibly shown that pain her actions caused.
So that Jac doesn't come to rely on her power, asside for the fact that she is a pacifist she is also several hundred miles away. Both characters are in the UCAS Witness Security program after getting involved in an investigation of a blood cult. During the course of the investigation, Jake drew the unwanted attention of the group's leader, a potentialy immortal (has regenerated from partial decapitation) hermetic mage who can induce SURGE-like alterations in his minions, and became the centerpiece of a sacrificial ritual, in which he lost his left leg and incurred the hunted (6) flaw because once the ritual has started no other sacrifice will do.
Kira exists for the sole putpose of pulling Jake's rear out of the fire (literaly and figurativly when the alignment of the planets is again favorable for the ritual and this insane immortal mage comes after him again. At any other point, its too dangerous for them to meet, lest they draw the attention of cult members that the FBI failed to arrest.

I'd like to know what otehrs think of the idea, especialy GMs

Basically, the rules involved with Level 3 Contacts do not make them the "friends for life" that they claim they are. A lot of people romanticize Level 3's, but the simple fact is they're not that great within the context of the game itself. They just make them slightly better than a Level 2 Contact (a pathetically minor +1 TN to resist answering questions about you and +1 Etiquette die is all you get for that 190,000 nuyen investment). At least their Friends of a Friend are a bit more helpful and pop up more frequently than a Level 2's.

If you see it as a problem, your only real solutions are to improve their in-game benefits to the point where they're worth nearly a quarter-of-a-million nuyen (willingness to die instead of betray you, lowered TNs for Etiquette Tests, maybe granting a free social Edge like Connected or Friend in High Place in relation to that contact only, or whatever) or lower their costs to something more reasonable to the benefits they provide (I like using 25,000 nuyen myself).

What you probably shouldn't do, both of which you mentioned in your post, is turn them into a deus ex machina or duplicate the benefits of the Friends in High Places edge by default. The former is just incredibly lame (whether a Level 3 Contact or not) and the latter is, well, already covered by the Friends in High Places edge... which is one of the reasons I suggested it just a few lines up. I mean, what if you just want a childhood friend who's just a mechanic? Forcing him to be a Friend in High Place doesn't make any sense.

In all of the shadowrun games I've ever been involved in we had no problems setting up the Level 3 contact as someone who would never betray you. The one cath on this is that these contact relationships are reciprical. It was one of our faces who first really put it together saying "Each of my level 2 contacts has me as a level 2 contact on their character sheet." We always played the friend for life as not requiring any sort of money as upkeep, instead the PC could call on them for favors, but the contact would eventaully call on the PC for favors. If the PC didn't help out his friend for life it he very quickly found himself without that level 3 contact.

I guess we really let PC actions dictate the nature of the Level 3 contact. If the PC calls his contact to try and rescue him from a tough jam, then the level 3 contact would call the PC up the next time he needed bailing out. If the PC only used the contact as a trusted information source, the contact is going to take an interest in the PC's runs and start asking questions about little details to set up his own stuff.

Most games I've been in that had Level 3's treated them similarily. But the actual rules for Level 3's aren't worth the cost. The only change is a +2 dice bonus instead of a +1 die bonus on Etiquette Tests and a Willpower(6) Test instead of a Willpower(5) Test to resist giving you up if asked. By anyone. About anything.

Example of a level 3 contact from a game I played in, seemed to work out well:

Street Mechanic whose backstory was that he had been like a second father to our Rigger when he was growing up. The mechanic owned 4 or 5 rather sketchy auto repair garages. He'd let us crash at any of them after hours if we needed to lay low and knew we werent being followed. He'd let us borrow vehicles for a few days with no cost. He'd build new vehicles at a deducted cost, order pieces at deducted costs, and repair our vehicles for nearly nothing. It was also fun to RP when we'd all show up at the garage, a bunch of scummy Shadowrunners who just make ourselves at home and the mechanic would get all huffy with our rigger about always coming to him, and hanging out with a bunch of thiefs.

He was with us for a good amount of time, until he got killed for helping us. We all really liked the character too, so we were bummed but it created a good story point for us.

Most of the "fixes" for contacts involved re-writing the system and it usually generated more problems than it fixed.

-Siege

A Level 3 contact is the only way of simulating certain things, most notably the "gang" or "tribe" from SR1 and 2. If you wanted your character to be a "made man" in the mafia, you bought a Mafia Boss as a level 3 contact, and in the description listed him as your lieutenant. Two or three of these would give you a sizeable gang of thugs whenever you needed it.

It's especially ludicrous that they got rid of the "tribe" contact but then created the "Pirate Family" edge.

I have a character who has a contact--technically level 2 (because it made sense in the context of the text and efficiency of it all--I'm very big on efficiency), but his contact has come out in the beginning of play to do a favor for him that is so beyond the scope of what a level 2 contact would do that the PC has essentially become a level 3 contact for her--he will do anything for her, and she remains a level 2 contact because she's, well, she's like his big sister, and in spite of the fact that she is ruthlessly ambitious, she doesn't treat him entirely like a tool for a job, even though at this point he'd take a bullet for her without hesitation.

I liked Userlimit's use of the L3 contact, that's how I've invisioned them being used also.

My group has a L3 Contact who is a Decker and they often ask him along to help provide decking services since no one likes to play a decker. He asks for cash here and there, but is mostly used to provide this service for them. We haven't fleshed out the RP element for him too deeply, but that will come.

I have one level 3 contact in my SR St. Louis game currently.

The character, known by the name Danny Boy, owns a gunshop. In his life, he found and rescuted a young Troll named Bones. Bones helps him run the shop and is learning the gunsmith trade. He's already fairly accomplished at what he does. Bones also has a cat named Chops.

As a lvl 3 contact, Bones is a capable combat character if needed. He's older now and was an enslaved pit fighter when he was found, so he's got both close combat and weapon skills. He's loyal to Danny Boy, since he owes his life to the man. He can provide alibis to the police, cover for Danny and his friends and also provides an "in" into the underground street and Trog culture in St. Louis. He's willing to go out on a limb and die for Danny, if the situation were desperate.

My level 3 contacts are "friends for life". You may not always get along with your friends, but they are always your friends, at least at this level. No matter what happens to Danny, he *knows* he'll always have Bones to back him up. In a world of crime and shadows, having someone to depend on like that is worth a large sum of cash.

My games do tend to be RP-heavy, though, so this approach may not work out for everyone.

on shadowland, since there are very few actual, established runner teams, we take each others' characters as contacts. i've got one level 3, a few level 2s, and a level 1 for every other character mine has ever interacted with for more than a single scene.

We've never had anyone generate a character with a contact beyond level 2 ever. No one has ever even asked. I think we had a level 2 once. My players trust no one!

Well, I know that I for damn sure haven't spent 200K on my best friend IRL, and we've been thru everything together. I think it's just a way to hose you outta nuyen you could be spending on guns and ammo.

True, but at no time did anyone in my life hand me a million bucks and say "ok, set up your life, divide the rest by ten, remember to buy a lifestyle and contacts, and nothing over availability 8"

Though I wish they would.