Four of us got together and started building on an idea that James had and by the end of the night we had a nice two player game using simple components that we'd all contributed to. I love that kind of collaborative effort. Over the next week James showed it to another friend of ours and they expanded it to three players, and at the next game night we changed it around some more (somewhat radically.) You gotta like change! It's coming along nicely and should be a fun entry into the contest.
But that's not the game I want to talk about. Once it's done I'll post something here so you all can see it and comment.
I like the idea of this contest on so many levels. First, I agree with Daniel Solis; there's not a lot of incentive to make a "new classic." At least not a lot of monetary incentive. There have been some reasonably successful games in this category like Blokus, or maybe Gipf, but in general that's not where the money lies. I applaud him for setting this up.
Second, this is a great design challenge. Making a game within a set of parameters like this is tough enough, and keeping it simple enough to be a new classic is even more difficult. No game with an 80 page rule book is going to last 1000 years. It has to be simple and elegant, but with a great depth of play.
Since I first heard about the challenge I've had about four different ideas for mechanics or such that I think could turn into a game for the challenge. None of them are very far along but I'm pretty excited to explore them and see what develops. I'll post more as it develops.