Personally I'm not hot on this idea. I have no problem with working in groups. Currently I'm involved with two projects where I work together with other people, but I don't think it is a good idea, to make the PGD Challenge a solely team based competition.

I think you will exclude many, if you make it mandatory to be in a group. I'm not sure if you mean the groups has to consist of PGD members or "random" people from outside PGD. If it is the former there are issues like Development Environment incompatibility (different Pascal dialects, libraries and target platforms), country and language issues and the fact we aren't many on this forum.
If it is the latter, I can't see why we must find some guy to form a group with, besides doing indirect advertising for PGD. And I don't know many (not to say noone) irl that uses Pascal.

The idea with the PGD Challenge was, that it is a small competition were everybody can participate and wont be overburden by the amount of work a half year competition would require. Making the challenge team based to allow for bigger themes seems to contradict with what the PGD Challenge is about. IMO the competition should allow for single and group submissions like the two last compos.