As people explained before AdWords is used to help you set up advertisements within YouTube videos. There is no contract but obviously you have to agree to their terms and say "I accept". As for the budget, I just did a campaign today and I selected a $5 budget so it's really cheap and you have full control of your budget. They give you an estimate of how effective your budget will be, for example I was given an estimate that about 250 views per day would see my ad. Also when you create a "campaign" you can be selective to who sees your add based on demographics and location which is amazing because you target exactly who you want.
Is it worth it? I literally just started my campaign today so I can't speak for myself, but I have heard several stories of people on YTtalk who said great things about getting their views boosted, but not sooo much for their subscribers.
Hope that helps