Brainstorming a little here.
A lot of game jams, both competitive and non-competitive, have a theme that entries should support. The theme can provide inspiration for people's designs, and at the same time it doesn't smother people because it's not a strict requirement and it's okay to shoehorn it in. The theme also brings a sense of unity to the jam; when browsing through all the finished entries it's neat to see how many different takes people had on the same theme. Themes from Ludum Dare, one of the most famous jams, and one that I've participated in a few times and ranked highly if anyone wants to chat about that, are words or phrases that are open to interpretation but not overly vague, like Connected Worlds, You only get one, Minimalism, Evolution, Escape.
So yeah, those are the benefits of jam themes. I'm not sure if directly using this style of theme would work (it might), but I really like the sense of unity described earlier. Although, maybe that exact feeling is not achievable in an IWBTG game competition; it also could be that just being IWBTG games is unity enough. In fact, I kind of feel that the restriction of being an IWBTG game is enough to inspire creativity and stuff. But I do feel there might be room for something special here, a unique IWBTG game-twist on the theme idea.
Another part of the "charm" of game jams is their short time frame. Ludum Dare is 48 hours, some are 24 hours, some are 7 days. You can try out new ideas or techniques or anything, and not have to be committed to it for a long period of time if you don't like how it turns out, since the jam is so short. It takes the pressure off (in a way, ironically), and also makes it less of a commitment lowers the barrier of entry (I'm not sure exactly but were these reasons people dropped out of the last contest?) (Also, I'm not suggesting this short of a time frame for this contest, I'm just saying the benefits it has, but actually perhaps a one-month time frame would work.) The time limit is also a constraint which inspires creative workarounds and shortcuts, in a similar vein as hardware constraints especially in older systems. Actually, hm, maybe a constraint on the size of the game executable would be interesting. Or some other constraint of a similar nature, like only 100 objects allowed on the screen at once. I bet there are some neat ideas somewhere down this train of thought.
Also, as a general thought for the contest, and I'm not sure how much of this there was last time, but having a forum thread or maybe skype group or irc channel dedicated to showing WIP screenshots and builds and chatting about the contest, asking questions, getting feedback, etc. would be good to have. I wish you and everyone the best in making this contest great.
Katz, I got a little upset over your word choice of "sloppy design" for that picture in your second point. I understand and respect your overall point in that paragraph, as well as your and others' views on needle, it's just that wording that felt a bit insulting. I know you probably didn't meant it that way.