I personall think now there is no incentive to win and the challenges seem to be out of the reach of the skill level of the current user base. So far i've noticed a lot of organic stuff when it should have been kept simple.
Mike, maybe
you should set the challenges and try to keep them simple, like a design your own games console challenge. Where you only have to design the console itself, not its inner workings. Thats simple and interesting enough for beginners to get involved and also has scope for experienced people to take the idea and run with it.
Or even one where you supply the model and tell the users to texture it, then its a month on just a texture which should increase the quality and the workload isn't as much to kill the spirit.
Apologies for the bump.