Re: digital camera design?
hummm maybe the projects you saw in the internet were re-build from others cameras. It's not that easier, even if it's a low quality camera you should use a DSP microprocessor, some memory to buffer the samples, something for USB communication... also you have to know how to write all the algorithms (DSP, microprocessor, USB interface, etc...). So if they did it from scratch even if they are undergraduate, they should be very skilled in DSP, and video processing.
You can try taking parts from a web-cam or something like that, and add some memory modules and stuff...