I think the mentality of "MAN! I'm glad that's not ME!" is a very big element of comedy. It's not new. Even old back and white shows and movies take advantage of pain and embarrassment. Even before that, I'm sure that plays, books, and verbal storytelling took advantage of pain = funny. If it really is funny is all up to personal taste.
The main thing you really have to remember about AFV and any game show where people do something crazy, they are subjecting themselves to that humiliation on their own. No one is forcing them to send in a video or compete in an event that will probably end in their embarrassment. That's part of the fun. If people knew that the contestants weren't comfortable or if they were forced to do something against their will, most people would feel uncomfortable. Being able to laugh at yourself and to let people laugh with you, not at you is something that people seem to be attracted to.