My idea for a group project: Co-Op, sci-fi, Diablo-Gauntlet type game.
Art Pros: Alien worlds lend themselves well to the diversity of contributers where art cohesion could become an issue. Sci-fi would be a good choice, Diablo has done hell/demons and Gaunlet has done fantasy/dragons.
Code challenges: Co-Op Multiplayer. Random map/dungeon creation ala Diablo. Prefix- Suffix based loot tables for endless variety in loot (Diablo, Borderlands, etc.).