The prizes are well worth it, as is seeing your winning entry in print and on their website. Last year they put 10 photo essays on their site, so that was great exposure for ten people.
Although there were some good images last year, the stories mostly weren't strongly edited. I have to be honest and say I thought the standard of last year's entries was lame! If you have already done Photocourse 1 at Photospace, I know you have a good chance of getting placed in this competition.
The photo story tips in the Listener article linked below are good ones. If you can ingest and express them all, you will win! Or if not, at least you'll be a better photographer through making an effort.
Another tip (from me): if you're stuck for something to photograph, pick up your local paper. In central Wellington, for example, Capital Times and the Wellingtonian are brimming with stories that provide leads to worthwhile photo essay subjects. Community vege garden, anyone? Or local beer brewing?