I searched the forums and asked a similar question some time ago. There is an add-on module called Project that does this and more. I installed it in my test server and had a look. The user interface for setting up a project is a bit intimidating... I should study it more carefully. However, I do not expect our system administrators to be very enthusiastic about installing a 3rd party module. For you it may be a viable solution.
The link to its forum is http://moodle.org/mod/forum/view.php?id=6930 and there you will find links to the documentation.
Pedro.
Assignment
Allow students to see eachother's submissions
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