GENESIS??!?! Blech. Should've went with SNES. ;P I might have actually been able to help with that.
As for project ideas... I'm a fan of randomly generated levels. Maybe a roguelike. Genesis had like the best console roguelike (TJ&E) so you could take some inspiration from that. Although you could probably improve the level generation a bit.
I grew up on the genesis. Since it's going to be running on an emulator, and my roommate dabbles in mixing tracks and also grew up on the genesis, I'm thinking of making a tool that generates the necessary boilerplate crap and makes working with the sound chip a little easier. Start small(ish)