Divide the class into sections. Those who already know how to program and those who don't. And everybody in between can just pick one.
But then again, that just focuses on programming games.
It might be interesting to have different people teacher different aspects of development like art, modelling/texturing, sound design, programming, music composition, etc. Then the students of each different section can form together in "teams" and each group at the end of the semester will have one big projects to present. They have to design it very thoroughly or else you will fail them!
Crazy Donut Productions, Current Project: Project Starbuks
Sony stole our name!