Xin and I are going to try and bring back the challenges, and we'd love to hear any suggestions you may have. If you would even like to contribute some code get in contact with one of us, and we'll see if we can work something out. I believe Xin's working hard to get some of the old challenges to merge with Vanilla. In any case, we're always open to suggestions!
If you are opt for challenging tasks,try to research about "how to develop reliable exploits for cisco routers" and as far as i know and see only there are few people doing these ,it is the area which wasn't explored much, just a suggestion tough :)
With cisco hardware you in a lot of cases need console access as well as ethernet access to 'do research on their hardware. I personally have a cisco lab setup at home so no probs.
If you can get your hands on an ios image, you can use it with any virtualization software to atleast test it out. You can also setup a box with GNS3, and setup a fully functioning virtual network (layer 2 functionality is iffy, you can't emulate switching capabilities without hardware, you can only simulate it). As for the hardware specifically, you can either buy used from ebay, or directly from the cisco website.
Ebay it is my advice. @m0rph is spot on as usual, GNS3 is a great tool I use it when I don't have access to the hardware. Also if anyone needs ios images for GNS3 let me know as I have a load of firewall and router images. Unfortunately you need an authentication key for PIX firewall images, you can use a well known google hack to find serials.