Google announces Google Desktop Gadget contest, with $8,000 in cash prizes. You can use Google Desktop Gadget Designer, a new developer tool for creating, maintaining and debugging gadgets faster than before.

The contest runs until July 31st, 2006 and, while supplies last, each developer who submits an approved gadget will receive a limited edition Google Desktop Developer T-shirt and have their gadget shown to millions of Google Desktop users around the world.

Three prizes will be awarded based on popularity, visual appeal, use of new features and creativity.
First prize: $5,000; Second prize: $2,000; Third prize: $1,000.

Winners will be announced on August 21, 2006.

You can check existing Google desktop gadgets to get some idea. Let me know in comments if you decide to participate. I will profile your gadget and link to it.