I came across this thread when searching "can you trust domain watcher services" as I wanted to find out if anyone else had the same problem as me. Hence my post.
I too have set up domain watchers with 123reg and never "got" the domain. All domain have been very undesirable in domain terms ie; long with two or more hyphens. Only those researching the domains history and links would know they were of any use.
The people that have been successful in securing the domains have all been individuals ie; not companies that use those catching facilities.
I have come to the conclusion that in setting up a domain watcher all you are doing is alerting an employee or employees at 123reg (or any other domain registration company) to a potentially valuable domain coming up and they or a friend buys it.
I for one will certainly never use this service again, I check the domain every day myself.