A software package that takes a schematic of an electrical system, or block diagram of mechanical system, and derives relevant equation (nodal analysis, or free body diagrams).
Build a micropower wireless sensor network. You will need to come up with a scenario where this would be useful.
Our signal analyzers (frequency analyzers) are of good quality, but are difficult to use. Design and build a more useful user interface (perhaps with an embedded computer like beagleboard, or a cheap android computer). Maybe a web-based interface?
Build an experiment for use in Control Theory class. Complexity is not necessary, but robustness is. Inverted pendulum, ball on balance beam, magnetic levitation…