As long as Space themes in an obvious way (IE a cave floating through space) then it's fine :)
How about a cave on the moon with an astronaut working his way through it?
Those sorts of things!
We're allowed to use royalty free music/sound right?
Of course!
Is it okay for multiple people to work on the same game?
Because we can't really prevent this, yes it is fine for multiple people to work on a game. The downside of course is that only one of you can win the prize. We can't give multiple trophies/rep/badges out, one entry per account.