I'm a CS student at ODU (virginia, US) and we have (almost) exactly this as our "capstone" CS course. It's two semesters: the first is software specs, development timeline, funding, that sort of thing; and the second is a kind of semi-implementation. As far as I know, the implementation is done by the same group of students though.
I can see a benefit of a different group doing the implementation, though - when using someone else's specs, it makes you aware of deficiencies in communication, both in the to-be-impemented specs and your personally written ones.
I have to say that I'm not really looking forward to this class. I probably won't be that interested in the group project, and the whole focus seems to be business-oriented... and while I want to develop software (that I'm interested in), I don't want to deal with the business end so much. Yes, INB4 comments about my naivety and such, but what is your advice on what I should try to get out of (focus on) in this dream-class of yours?