Read Drive: The Surprising Truth About What Motivates Us
It contains some good insights into how to motivate and which pitfalls to avoid. It's really easy to mess up and kill motivation by offering external rewards ("I worked my ass off and got a movie ticket, gee thanks") so don't do anything hasty.
That being said a somewhat difficult but fun motivational tool to implement would be to make development gameful. Build a leveling ("Level 4 programmer, Level 10 tester") and badge ("You just earned the bugslayer badge!") system. Team-members get experience points for fixing bugs, meeting milestones, shipping etc.
To start things off you can give them 1 experience point retroactively for each day they've worked in the company and like 100 points for each project they've completed and then level them up accordingly. Level on a curve so that it's easier to level up in the beginning but requires more points as you reach higher levels. Make leveling fun and put some kind of ceremony around it or at least send out an email to everyone in the team when someone levels so that they get some recognition (good for pride). Only offer experience points for things that truly matter or the whole system will only seem dilbertian and stupid ("What mineral are you? Lint...").
Tying levels to monetary rewards is tricky and requires serious thoughts so that they do not backfire. You should be paying them well anyways and monetary rewards aren't that effective. Better to let them "unlock" different perks as they level up, starting with small ones like upgrading their "gear" (monitor, computer etc) to really good ones at higher levels (have a day off every week to work on personal projects/ Personal washing service) and really really good ones as they reach like level 60 (1-year long sabbatical to do whatever the heck they want) so they have something to aim for.
The perks should be above the baseline of what you currently offer, and don't lower that baseline just so that they can level up to it. Ie if everyone at your company gets dual-monitors 24" than you have to offer a perk above that ("dual 30" monitors!").
Also, come up with fun badges for different stuff, both on a team and individual level.
Make sure to promote co-operation rather than competion. Ie, "how many bugs can we fix together" rather than "who can fix the most bugs".
Might not work on all kinds of people (like stodgy 60 year old COBOL programmers) but I bet many would enjoy it
Reality is broken is another really interesting book on this topic.
"Achievement unlocked: Shipped!"
PS. If anyone implements this, be sure to leave a comment (or link to a blog entry) on how it works out so we all can learn from your success and mistakes :) DS.