Actually, the Defense Advanced Research Projects Agency isn't trying to save money (taxpayers should be so lucky). Congress recently changed the rules for the Department of Defense, and it no longer has the authority to award cash prizes.
Robot fans needn't be too concerned about a lack of entries for next year's event - the eleven "Track A" teams selected this month for the 2007 Urban Challenge will each receive from DARPA up to $1 million in technology development funding, in addition to the support of their corporate sponsors. The A-teams include last year's winner Stanford University and perennial contenders Carnegie-Mellon University, as well as big-time defense contractors Raytheon and Honeywell.
"Track B" teams, which receive no funding from DARPA, can still earn their way into the final competition for the DARPA mugs by successfully completing qualifying events. The Urban Challenge final event requires competitors to safely complete a 60-mile simulated urban area course (in traffic) in under six hours.