I think it is a fantastic question to ask someone out of college. It shows those people who are passionate about something and went beyond the minimal requirements for their degree to achieve it. A passionate student could answer this question in a number of ways; he could point out an open source project that he published on Github that has users, some research that he did with a professor that got published, or even a class project that got him interested in the current position he is applying to. I mean, John Resig would talk about the projects he did as an undergraduate that lead to jQuery[1].
If you dig into the details of a candidate's answers to this question, you can find skills that they might have forgotten to put on their resume. Such as the fact that they know git or Matlab. You can ask them whether they used design patterns in their project and use that as a launching point for a short quiz on design patterns.
You do lose a bit of control of the interview process when you ask an open-ended question like this. A candidate can go off on a tangent about something irrelevant to the job. That is a risk. But it could turn out that you learn more about the candidate from his answers to this question than the puzzle problems that you might have planned to give him.