I think it's a great requirement. So many of the projects would turn into CRUD apps. It's Computer Science and there are a lot of other interesting things to do which students will never consider without making them stretch a bit. I think too many programmers are devoting their efforts to geo/social/commerce/blog apps and are losing sight of all other problems.
My senior project was on audio synthesis, granular synthesis in particular. I'd recommend any project in the generative art or audio space.
I think it's great that it makes sense to veto generic 'web applications' or even 'business applications' in general, but I can't see why they need to impose such a broad restriction in order to make it happen. Why isn't it sufficient just to tell everyone "no basic applications - we're doing science, not software engineering methodology" and leave it at that?
That's what I spent a day discussing with the Head Of Department. Every student is disgruntled about this restriction.
I know about ninite.com - the concept is quite similar, except that this one if a bit more flexible - it would allow the system admins to create their own auto-installation modules.
My senior project was on audio synthesis, granular synthesis in particular. I'd recommend any project in the generative art or audio space.