While good for inexperienced designers, this seems a little unfair to try and get free work out of people, but I'd be interested to know if designers tend to feel this way or not.
Perhaps labeling the OP as 'is it a good deal' and 'unfair to get free work out of people' is not appropriate in this context. I sure hope that some designers who have benefitted from Ruby (or other open source projects) will step forward to contribute their time to redesign ruby-lang.org -- regardless of 'getting featured' or 'not getting paid'.
Disclaimer: I'm not a designer.
http://www.nospec.com/ http://www.aiga.org/position-spec-work/
A free job for a non-profit is a little less bad, as presumably the motivation is to help the non-profit, rather than to make money. That said, a free contest is going to waste a lot of effort.