There are numerous people and professions who intentionally remain independent contractors (my father is one), rather than becoming an at-will employee. Each party should have a choice: the worker about whether he joins a company as an employee (and gets the benefits and "security") or remain a contractor (and remove the cap on income and have more control over their work), and the company about whether they'd like to offer benefits and "security" as a method to attract the best talent, or if they'd like to operate with independent contractors (which generally will mean more work finding them, managing them, and maintaining quality).\
Really, it should basically be the choice between being a freelancer or an employee, and the choice between hiring an engineer/designer or just one off freelancers.
You are assuming that this is a situation where a contractor is very similar to an employee. These only really exist as employers try to avoid employment laws. This is an employee, not a firm in the context of that paper.
A "real" contractor negotiates rates regularly and with different pricing models, takes work from multiple contractors, pay for their own tools etc. In some cases you genuinely have a "firm" with one client but that's rare.
The question is are these uber contractors contractors in this sense? I think they are.
I didn't assume that this was similar to being an employee. I'm saying that people do make the conscious choice to be contractors over being an employee (this is empirically true, and you just named a few reasons why one might). I think Uber is absolutely a contractor model - the drivers buy their own tools (car), experiment with pricing (can work with any car sharing company, can move to areas with more demand), and take work from all the carsharing companies.
Really, it should basically be the choice between being a freelancer or an employee, and the choice between hiring an engineer/designer or just one off freelancers.