It depends on how many teams you have. If you expect to have 10 - 15 teams then I'm with Ford, you don't need to pay down to 10 places. But if you expect 30 or 40 teams, then you should pay down to 10 to spread it around to as many teams as possible (since the top teams inevitably tend to be repeating in categories) in order to encourage as many teams as possible to return.
Also, like others said, it depends on your number of categories. But since you are a first year comp, sticking with the 4 basic categories isn't a bad idea. Then next year branch out as a nice way to expand the competition.
Some things that are nice additions for the cooks:
Simple gift bag.
Coffee/Donuts on Saturday morning, or have a local kids/teens group do a breakfast where for like $5 they deliver a nice hot breakfast (eggs, biscuits, gravy, sausage, pancakes) and all the money goes to their activity group.