One issue I have with open source if that I sit on top of a code base which has been generated by paying monthly wages to developers.
Well to me this seems to be an excellent reason to require contest entries to be open sourced. Let me explain.
You would get an unfair advantage if you could participate in the contest using a code base several man-months worth as a starting point, and be allowed to keep that code secret.
If you are required to release those sources, then fine, you might win this contest, but at least from then on, everyone can play around with that code and do nice new stuff with it, so the playing field is leveled again. Or you may choose not to release that code you are sitting on, and make something new altogether, which is also cool and fair. Or you may choose not to participate in the contest at all, and keep on releasing commercial titles, which is also fine with me (it doesn't contribute much to the homebrew scene, but it doesn't hurt either).
So in summary: I think requiring the entries to be open sourced makes the contest fairer, and more beneficial for the community as a whole. Even if that means there are less participants.
@iprice (is that IP-rice or i-price btw? or something else?): There are other reasons besides porting to make things open source (and preferrably Free as well). Allowing others to build upon what you created, letting them "stand on the shoulder of giants", that's in my opinion a more important part of the contribution than those nice little binary executables, no matter how many different platforms you're willing to compile them for.