This post doesn't deal with the legality of giveaways but rather the logistics. Tracking entrants can me a real pain—especially if you want them to do more than comment on a post.
For this site, I decided to try out a simple form system. I tested quite a few of the free ones and decided to go with Wufoo. It was easy to use and had a clean look, although it's bigger than I'd like. But hey, FREE.
Here's a site that lists several other free form makers.
If you want something more than a simple form, try Rafflecopter. I've used them on several sites in my real-life job.
Up until now, you had to ask to use them and wait for acceptance, but they've just done their official launch and anyone can use them now.
They're also doing their own giveaway where you can win an iPad2 or a Kindle Fire. Here's the link to that info.
And while you're there entering to win, browse their entire blog. They have lots of good ideas for holding giveaways. (Remember, I don't know for sure that all their ideas are legal, as I am not an attorney, but some of the info is very, very good.)
Have you used something to track your giveaways that you can recommend? Let us know in the comments.