Tony over at Computer Science Canada has some ideas for student video game projects. I've had students write variations on some of the ones he suggests. Not being a real player I am not familiar with all of the examples he gives but students probably are.
There are lots more games that can be created of course. The old programming standards are things like Hangman and Space Invader clones. I have a few game projects in the classroom project books I wrote. The Visual Basic editions (one for .NET and one for VB 6) may be found at http://www.acthompson.net/TeachVB/index.htm and the C# version (a little different set of projects) may be found at http://www.acthompson.net/DotNet/Default.htm Probably time for me to revisit these and add some more. I am hoping to find some time to develop some XNA projects this summer. We'll see.
Card games are also very popular and Express Edition starter kits include a Black Jack game that students can learn from, modify or use to create their own card games. (VB kits here - C# kits here) Lots of other examples of game programs out there on the Internet as well. What is your favorite game project for students?