Rather than making each prize bigger and better as new stuff is added, maybe you could offer a couple of more spots (4th and 5th). This would allow for more "winners" and might increase the participation... i.e. if there are more chances to win, maybe more people would enter.
Later,
Eric
Eric: I was thinking about it, but here's what I came up with:
If the first and 2nd prizes are so big and cool, it will give more motivation for people to do their best work, and most robust work.
Also - if I have 5 prizes and only 3 entries - I'd look like a jackass ;)