I agree with Kym with having a picture as a frame of reference for the story. (I thought it was a brilliant idea when I first saw it in the original competition.) It just seems to make the stories more ... visual. What's the often used phrased, A picture's worth a thousand words. Hey, that's nearly a page of writing gone in one foul swoop. <Grin!>

I'd recommend not putting too many restrictions on story writing ... I was involved with another story competition a couple of months back where the website owner said what the story theme was going to be, then he said what the story had to be about, then he said he only want three characters involved and described their occupations, desires, history, etc ... the only thing the authors could write about was how the characters physically look. The rest of the story was done.

Needless to say the webmaster only got a couple of stories (I didn't bother writing anything after reading the rules) and the competition was really a waste of time. The webmaster then amused us by writing a nasty forum message saying how disappointed he was that no one cared enough to write anything.
Homer Simpson, you're not the dumbest dude around.

The only rule I'd recommend is page length. When I write a chapter in my stories I routinely keep the chapter to approx 8000-10,000 characters. Anymore and readers will often get tired, bored or worse, won't finish the chapter. So let's say one story with a max of three chapters, and the story has to have an ending.

[Fire-bird jumps down from his soap-box and dusts it off for the next person.]

Fire-bird