The answer is Yes.
You can do anything you think would help people, nations, or world wide, if you don't mind, let me tell you something. Try to see Imagine Cup in this way
Imagine Cup: Is not just a software competition sponsored by Microsoft, Imagine Cup is a real world oportunity for real world students to full fill their potencial, in many ways: creativity, programming, designing, etc... this is a global challenge that says: "Our wold is going down in many ways and has may problems; so Imagine Cup ask for students like you and many many others to do something to do this world a better place, something to help, something to grow as human beings, using technology as main tool, technology of this days"... then Microsoft will bet their best cards for the best global students, for many reasons, the main "students with impresive potential with amazing skills to share to the world and build the IT next generation solutions."
This year is the most difficult theme, 'cause anything could be amazing... so, as "suggestion", they propose the 8 MDG's therefore you would spent less time thinking about what to do (those 8 MDG's born from the needs of many countries, almost all the contries around the world have the same problems, of course in less or more impact)
Finally: Have Fun! and enjoy the process this is a amazing experience, you will never forget it!... I bet my head!