I'm a psychnurse and I LOVE students taking over the one and only task I really stress about. The reason I stress about it is because I am sooooo busy I don't have a lot of time to do groups but I'm expected to anyway even though I ALWAYS get interrupted when I do... but that's another topic.
First of all: Patients LOVE the snacks but don't overdo it. There are diabetics remember. Sometimes the well meaning students make these incredibly loaded grab bags full of cookies and candy and crap and everybody's blood sugar is sky high. If you just bring some hard candy you'll be a hit and get a big turn-out. If you do any self-sharing type discussion groups, try passing a candy dish for each person who participates. Everytime you participate you can select a piece.
Collages usually do well and we do allow children's scissors but you have to count them before and after collection. Self-portraits are a favorite of mine... just to see what people draw. And you can win points with the staff if you have patients draw their favorite staff person etc... (I had a schizophrenic patient who couldn't remember her doc's name but she was convinced he had one leg that was substancially shorter than the other. This became completely endearing to all of us since it was not true...but his name was Dr. Shirtlek >>>short-leg?)
Any craft is fun for them just use non-toxic supplies. If you want something that is a bit more educational you can do match the symptom to the diagnosis games. We did a bulletin board once that featured patient-decorated hot air balloons but in the baskets they had to write 3 wishes. You could modify that to 3 things you know about your mental illness and name the balloon itself with the diagnosis. Or if you don't want to get that deep- you could lighten it to your 3 favorite songs or something about themselves.
Somebody once had patients decorate socks with colored sharpie markers. That one sort of depends on your resources. Our hospital gives each pt a pair of socks on admission though... so you could ask if you could have enough for each person to decorate. Believe me the hospital wastes so much more money on much less useful things than that they ought to thank you for doing something cheerful for the pts.
Zumba dvd is a favorite standby for fitness groups. People love to line dance! And make your classmates do the group too.
I hope this helps.