Yes, though people were giving out barnstars before, the rate of giving barnstars has grown up these days after the WikiLove localization by Suryaprakash. Wikilove is intended to promote love :) You can read more here at foundation report[1]. Wish more Indic communities localize this and community members pat each others back often to increase the motivation level among growing communities.

And yes, the user is rewarded with several, check out[2]

[1] http://meta.wikimedia.org/wiki/Wikimedia_Foundation_Report,_March_2011#Wikilove_0.1 

[2] http://tawp.in/r/1y92

http://srik.me