I've been in startups for about 15 years. One of the hardest things I've had to do was lay off 4 people we had just hired a month earlier.
One of our partners had agreed to terms on a project that required us to staff up. When the project fell apart on their end the whole thing was cancelled. We just didn't have the budget at the time to keep those people on.
It absolutely sucked. We tried to be generous with severance.. but these were people who had just turned down other jobs to take this one. We just kind of dumped them back into the market. It absolutely sucked.
I vowed then and there to never hire people unless I was absolutely positive the money was in our bank account.
This is one of the advantages of hiring contractors. They are used to the pump and dump, and if you really like them you can negotiate a longer term or permenant contract.
In the slightly stodgy public sector organisations I work in, using sessionally paid teaching staff to cover increased workloads is normal. If the workload increase becomes permanent, you can then advertise an established post. Seems prudent.
Perhaps as someone round here suggested some time ago, you should treat these companies as film projects. A group of freelancers get hired in to complete a project then when their work finishes they go on to the next project?
