I was at the hackathon too, and had a good time. It certainly felt a lot more like a Startup Weekend than a traditional hackathon- there were people there that had ideas they'd clearly thought about for a very long time, and wanted to continue to work on after the event. That's awesome. But I suspect I wasn't the only developer there that wasn't willing to make that kind of a commitment to a project, and was just there to work on some interesting ideas.

So, I suspect the key here is communication, and setting people's expectations before they walk into the room. As it happens in this case, I don't think the judges on Sunday participated in the panel on the first day, so they weren't judging based on 'real world' merit- I know of at least one "boring, back-end" solution that didn't even get the chance to present.