Nature has an article about a micro aerial vehicle (MAV) challenge in Agra, India. The task in the challenge has a military/anti-terrorism flavor - using tiny aerial vehicles to find mines, hostages, and the enemy using various sensors and positions (eg: flight, hover, rooftop). The challenge is co-sponsored by DARPA, and has international competitors.
You can find out more about the challenge, teams and judges here. Also, here's the general MAV 08 site.