Several smaller cash prizes is always a safe way to go. I would assume most of us hobbyists on here have jobs, or otherwise are handling the bills in some way other than what we do on itch. One big prize lowers the chances of any of us getting anything. Several small prizes just increases the chances of getting "recognized" and maybe getting a few bucks to throw towards something to enhance future game dev projects, or whatever else.
My favorite game jam I have participated in so far offered a free course on a game dev education site, for everyone who participated. Mind you, the host of the jam owned that site, so it wasn't necessarily a ton of lost profit, if anything it probably brought more people to their site, who may have bought other courses.
I'm definitely more likely to join jams that offer some sort of a prize, but jams that offer courses, vouchers for software, free games, etc. I always thought these were cool ideas. I think one of the jams I submitted a project to was giving away steam gift cards for the top three winners or something like that.