The most appropriate prize I can think of is a link to the winner's Steam profile off the Insomnia frontpage (and near the top, no less: right under the GOTY Awards link).
I could create a prize pool from the entrance fees, but I think that would cheapen the event, and attract the wrong kind of person, and I can't think of a higher honor to bestow on anyone than to direct link to him from the very top of my website for an entire year.