The rules are pretty open - although the contest is under the heading of "University Contest", any student or group of students from Unis or senior/high schools can enter. And the subject of the design can be pretty much anything, so long as it uses or emulates at least one ARM processor. Suggested ideas include embedded RT Linux applications, cryptography, low-power applications, simulation, language interpreters and compilers.
ARM is not only interested in new low-cost, low-power solutions; entrants will also be judged upon the innovation of their designs. Prizes include professional design kits and ARM powered devices
More info can be found on ARM's website.