One would presume that done correctly it helps to increase lung capacity, given that wind instrument players and singers (who effectively hold their breath) see substantial increases in lung capacity. Whether this is better achieved to taking regular deep breaths or by holding one's breath I have no idea.
When I was in year 12 we measured people's lung capacity during biology for something a bit different and related it to their size and the activities they performed. Swimmers and life savers seemed to have relatively high lung capacities. The (female) teacher who was a choir singer nearly matched one of the girls who was a real sporto and surf life saver. The top three were myself and two of my friends, I had 6.6 litres, my cyclist friend had 6.6 aswell and my (massive) martial artist friend had 6.8 (note this is Vital Capacity, not total lung capacity) Its also worth noting that I am not overly fit, yet I am quite athletic, ie I do a lot of activity, running, martial arts, etc but I'm still a bit over weight and drink and eat too much (you can see a picture of me in the weapons pictures thread in the weapons secion
). Whereas my mate the cyclist is real toned and the like, which leads me to believe that lung capacity is more directly related to how much you push your lungs and less how fit you are... Anyway getting off topic, lol.