Google Summer Of Code 2007 is on!
See the Google Code Blog, it looks like students will be having (constructive) fun with open source projets once again this year!
For interested students, I'd recommend making yourself familiar with the projects that you're interested in in advance, like right now. You don't want to start cold when you have to write your proposal.
I'm not sure if I'll be able to mentor projects this year, due to Big Changes Ahead I have to be careful with my planning.