Study users by letting them design your UI

I think this works extremely well when your users are familiar with the tasks associated with the type of thing your making. But if you're creating something entirely new, they'll need more guidance from the designer to get users started.

One thing to watch out for though is that you can't always rely on what people tell you they like or want to use. There is a huge difference between what people say and what they do. Again, this difference is further magnified if the thing you're creating is something new. It is very hard for people to imagine their life with it.

Other strategies for involving your user in the design process which work very well are: contextual inquiries (to understand what things your audience needs) http://www.usabilitynet.org/tools/contextualinquiry.htm, think aloud studies (to understand how well your product is meeting those needs) http://en.wikipedia.org/wiki/Think_aloud_protocol, and card sorting (to understand how the user expects the product to be organized) http://www.boxesandarrows.com/view/card_sorting_a_definitive....

I guess you could hold a contest where users have to both submit their design ideas and vote on what they like, and giving a prize to those whose ideas you use; acceptance of which indicates they agree that you're allowed to use their ideas.