If you're a student, "your time is (close to) free" is not an entirely unwarranted assumption. In fact, most students are paying people huge sums of money to take up their time, so one could even argue that their time has negative value. Anyway, let's assume you are rather unambitious and go with an app that takes, oh, 24 hours to write. You would only have made $240 before tax in your job at Starbucks, so the contest is a win on a monetary level. And that's not even counting the fact that it gives you some rather marketable experience (which, again, is something students normally pay for).
Not sure who pays for someone "to take up their time", usually its an exchange of time for skills, or time for experience. Also, assuming students can only achieve unskilled minimum wage jobs is kind of silly. It's not that hard to get a paid internship at $30+ an hour.
Not saying it's a terrible deal either, just saying that it's not a "you're missing out terribly if you don't do it" opportunity.
