I used to do the "member of the month" thing, but realized that active members were only those people, and I suppose my prize failed to interest more members to be active, haha. But that is actually a nice award (although probably overused a little, doesn't matter).
On a forum I'm a staff member at, we regularly make contests related to members (like what FP has, categories for members) and give them medals and awesome titles to stand out from other members. They look pretty interested with such kind of award.
I also think it's fun if we make a kind of funny contest regularly and give members award for winning it. Funny as in, for example: "Best Meme of the Month" or "Best Signature of the Month" or "Most Smiley Abuser of the Month". They sound silly, but it's less official and feels fun, gives a more laid-back atmosphere around this whole special award thing, and that members are appreciated being whoever they are.
Sorry for the long post. 😛