Version control is a Good Thing. But supplying our students with a centralized CVS-server resulted in a lot of overhead (creating accounts and repositories, changing permissions halfway when the projects start, etc) which is a Bad Thing. So I started looking for an online version control system that students could manage for themselves. The first couple I found were free for one user per repository, but not for multiple users.
But then I stumbled across http://www.assembla.com/. This site offers not only a free Subversion repository but includes it in an entire suite of tools including Trac and a wiki. I uploaded all the code from our exercises into SVN (which integrates with Eclipse) and force students to get the code from there. When the project starts in two weeks time I will instruct the students to use the wiki to document the requirements. So far, things are looking good.
Check it out: http://www.assembla.com/