Selecting a software development project

I am currently my software engineering degree and as I am in my second year I need to select a topic for my project. I am totally confused on how to pick a good project topic, which I could use in my final year as well. I have specialization in the following areas, java, vb.net, sql server 2005 as well as artificial intelligence.

I can also manage with designing interfaces for vb.net in flash.

Any help on a good topic which I should select would be greatly appreciated.

The best projects are the ones that you actually want to build. I struggle with this kind of thing myself in my "outside-of-work" projects.

1. Gauge the amount of time you have to work on it, that will probably limit your possibilities.
2. Pick something you're passionate about, even if it means learning a few (small) things -- this isn't a good time to learn C# or Ruby, but using learning how to use encryption in VB.NET is probably small enough.
3. If you can, build something you can use or that someone close to you can use.

An example: I built a small P2P messaging client for my 3rd year security course which used Public Key encryption to send messages between clients. It wasn't fancy, but it worked and I managed to build it in about 3 weeks. A few of us used the client in class for the remainder of the term.