A contest based solely on Twitter is a tricky thing.
Ideally, you want to use the power of Twitter for your promotion, but you don't want your marketing "signal" to get too noisy or repetitive. I like the KFC answer that was given previously, because it challenged entrants to create original content in their tweets. Compare that to a "retweet this to enter" approach, and I hope you can see how one has much more value as a marketing message than the other.
Our company offers software that powers video, photo and essay contests and promotions (on your own site, a microsite or as part of your Facebook Page) and then facilitates voting and sharing of those original entries on Twitter, Facebook, via email, etc. This has greater potential for spreading across the web, encourages the creation of original content in the name of your brand, and allows you to download any amount of data from contestants who enter.