I am going to be running a consulting course for senior undergrads this fall, in which pairs or triples of students will write real software for real customers. (I'll be running the course again in the winter term for graduate students.) The brochure for the April 2008 Capstone Showcase will give you an idea of what students can accomplish; if you have a project for a couple of talented young programmers, please get in touch. Requirements are:
The software the students build must be open source, so that they can talk about it and show it off in public.
Each student will put in about 120 hours during the term (8-10 hours a week for 12-13 weeks), so the project must be scaled accordingly.
Things that demo well are preferred---many of them will want to use their capstone project in interviews for jobs and grad school.
Things that make the world a better place are preferred as well.