As with all things it depends on the contracting company and the client company. I worked for a company as a contractor to another company and I made more than I did when I worked for the other company (my job was outsourced to the company I currently work for), it was easier to get raises and I hadbetter benefits as a contractor. I have also worked for companies in a contract to hire postion where I was better off when I converted to the permananent postion and ones where there was basically no change whatsoever except who issued my paycheck. I have seen contractors treated exactly like employees and places where they got the worst office space and no one wanted to learn their names because they would be gone shortly.
People misunderstand when they think that you are making less because the agency is paid one thing and you get less than that. The agency has business costs and profit that have to be covered by the costs they receive for your work. So they should be charging at least 3 times your salary as a rule of thumb.
This does not mean that if you were hired directly, you would receive 3 times what you are getting. Many people I know who have converted from a contract postion made less in the permanent postion because the company now has to pay for benefits and their own overhead costs. They might have been paying you more because they knew you would have to get your own health insurance or pay for your own time off, etc.
One thing I do know is that attitude makes a huge difference in how you are treated and how you perceive the reality of your work life. If you go into this thinking, "Oh poor me. I am stuck as a contractor." you are likely to be treated as some temp person who is not worth bothering to get to know because that attitude will show up in your behavior.
If you go in thinking "This is a great opportunity to show my value and to get them to take me on permanently and wow I will be able to learn so much", that attitude will also show.
Yes some places treat all contractors badly. These places tend to also treat their own employees badly as well. But even in those places, some people will get better treatment than others, so your attitude towards your work will count.
Don't be down on yourself because you started as a contractor. Don't think all is bad because you are a contractor.
Don't think entry level is going to be better if you are permanent. Entry level jobs are not the best jobs in the bunch no matter how you slice it because they are entry level. The most junior people get the tasks no one else wants to do; they have to prove themselves before they are trusted to do more interesting work. There is a reason why people don't want to stay at entry level for their whole careers. This is not a function of being a contractor or not, so remember that when you look at this job. The jobs you get will get more interesting and better as you get more experience. Contracting is a great way to get experience.