I believe that reality shows, however contrived and unrealistic, are popular because the emotion is real. That is, somebody who has just lost his or her chance to win big bucks (or a chance at celebrity) is genuinely unhappy. People do like to see misery on camera, so they watch.
Of course, when the winner eventually emerges, his or her joy is real, too, and people do like to see that, especially if they have gotten to like the contestant.