Microsoft's Michael Stroh said that The Windows Phone Blog had been receiving so many cakes that they decided to turn it into a contest. Sweet. As for which Windows Phone model will be awarded as the prize, the blog said that they would work with the winners to give them a model based on each winner's current carrier. The beauty of a cake contest like this is that taste doesn't count, so even if you can't compete with Betty Crocker, you still might be able to whip up a new Windows Phone.
source: WindowsPhoneBlog, WindowsPhoneCakeContest