Photojojo have come up with an interesting and fun challenge.  Rather than sending a letter and getting the people to send on the letter to everyone they know (a chain letter), this works by taking a picture with a picture in it, or retrospectively adding the picture digitally.  Pass this on to friends who repeat the process.  So eventually you have a photographic Russian Doll effect.  It would be interesting to see how many pictures can be nested.

The full article and example can be found at http://photojojo.com/content/photo-projects/the-photo-chain/.