Contests are fine. I might even participate myself. Its a fine way to get new contributers out of the bushes. The problem is, that a contest only takes what comes in the limited contest period. A lot of people are doing a big contribution every day. Both when a contest is running and between. What about that effort. Shouldn't that be rewarded as well ?
Sun Microsystems has announced that they will support the Sun driven open source projects with an amount of 1 million dollars.
http://www.sun.com/software/opensource/awards/index.jsp . Contest will be published within the individual projects soon. These projects are GlassFish, NetBeans, OpenJDK, OpenOffice.org, OpenSolaris and OpenSPARC.
You can find the announcement from Sun here: http://www.businesswire.com/portal/site/google/index.jsp?ndmViewId=news_view&newsId=20071205005370&newsLang=en.
The contest for openOffice.org has not been published yet, bur further details is promised before the Christmas holidays. It'sinteresting to see what they will come up with this time.
I suggest that some of the money from Sun should be used to establish an international annual open source award. The award can be given to a person, organization or OS project that has contributed to open source in general or an individual project in particular.
I'm also thinking domestic. In Denmark we have had an annual event now for a decade, called LinuxForum. From 2008 the event has changed name to Open Source Days ( http://www.opensourcedays.org ) because the event isn't just Linux.
Why don't we establish a domestic open source award.