I basically agree with Kesta and Chris, but I'm suggesting some tweaks that would (1) prevent newbies from having to deal with a complicated rating system, per Writhdar, (2) keep the incentive for third place to stab fourth place in the endgame down to a managable level, per EricHerboso, (3) reward players who seek out new opponents, per Kresta, and (4) keep the incentive to play in thirty games at once down to a manageable level, per half the forum,
(1) Newbies shouldn't have to fiddle with buy-ins and stakes just to play their first game. So, let's let newbies into newbie games for free. A new account starts with no credits, making the creation of multiple accounts less tempting. A default new game would cost nothing to enter. A default game would pay, say, five bucks worth of Diplomacy Dollars to everyone who finishes the game (whether by being eliminated, drawing, or winning), plus EITHER one Diplomacy Dollar for each supply center held by those who cooperate to force a draw, OR a big prize of twenty to thirty Diplomacy Dollars for players who outright win. Since outright winning is theoretically the object of the game, it deserves more than just a reward for 18 supply centers.
Meanwhile, those who have won a few games against their fellow newbies will have the credits to prove that they're advanced players. Most advanced players will presumably be able and willing to fiddle with the game-start options, so they can set up non-default new games that require paying a stake of Diplomacy Dollars up front.
(2) The problem with dividing the entire pot according to Chris's formula [proportional by supply centers held at end of game] is that, as Eric points out, it will pretty much stop smaller players from banding together to stalemate a major power, since all supply centers are equally valuable. However, we can use Chris's formula to distribute half the pot, as long as we distribute the other half of the pot equally among all those who force a draw! If there's an outright winner, then the 'draw' half of the pot goes outright to the winner. That way, if you're in third place in the endgame, instead of trying to decide whether you can make exactly 8 supply centers by stabbing fourth place, you can weigh the risks of stabbing fourth (first place might win outright, depriving you of your share in the 'draw' half of the pot) against the rewards of stabbing fourth (you get some extra supply centers, and thus a larger share of the 'supply center' half of the pot).
Fastspawn, I agree with you that 8 SC is an arbitrary number--there is definitely some sense in it, maybe even more sense than any other number. In my opinion, though, there's no need to pick *any* number. Providing flexible incentives that reward both drawing and gaining centers will lead to a more interesting variety of strategies and of endgame scenarios. People will have more fun.
(3) It's easy to reward people who seek out new opponents. No game should be zero-sum, so in advanced games, ie, stake-games, instead of paying out $5 for finishing plus $1 per supply center or $25 for winning, pay people who finish the game (by being eliminated, drawing, or winning) according to this formula:
(Buy-in Stake) / (Total previous games played with all opponents + 1)
For example, if you played an intermediate-level game, wagering, say, 68 Diplomacy Dollars, and there were two opponents you'd seen before, one of them once and one of them twice, you would collect (68) / (2 + 1 + 1) = 17 Diplomacy Dollars just for finishing, a quarter of your buy-in.
If, on the other hand, you'd played just about everybody in the game at least four times, you'd only collect about (68) / (6 * 4 + 1) = 3 Diplomacy Dollars, rounded up. Of course, you can still win stakes off your opponents by beating them in game after game...if you play with the same people all the time, and you keep beating them, your rating should go up and theirs should go down. There's a nice limit, though, since after they lose all their points to you (since they lose them to you faster than they get them back from the increasingly-tiny finishing bonus), they won't be able to play stake-games with you, and you'll have to go find new opponents or be reduced to preying on newbies, which doesn't pay well enough to make you one of the website's Top 10 players.
(4) How do you keep people from joining 30 newbie games at a time, ordering a hold every turn, and collecting 5 Diplomacy Dollars a pop when they're eliminated? Simple. The community agrees on a limit (2 games a week, 3 games a week) for collecting newbie finishing bonuses. You can still play as many games as you like, and you can collect Diplomacy Dollars for winning or drawing as many games as you can manage to win or draw. You just can't collect points for simply being in the game beyond the level of simply being in the game that we're trying to encourage.
How do you keep advanced players from joining 30 games at a time and getting rich off the 'finding new opponents' bonus? Easy. If you're eliminated from an advanced game, even if you've never ever played with anyone in it before, you still only break even. The stack of bonus credits added to advanced games just isn't big enough to reward people for playing a zillion games. Of course, people can play as many games as they like...but if they lose almost all of them, they'll eventually lose credits, and if they go into civil disorder on a regular basis, then they won't even collect the new opponents bonus, so they'll lose credits so fast that they'll be back to newbie status in no time at all. And the newbies won't mind so much eating up countries that go into civil disorder--it means they can play with the big boys that much faster.
Oh, and I'm sympathetic to figlesquidge's holiday scheme. Don't know how to work it out, but it sounds like a good idea.
Finally, before you jump on my post as insanely long and complicated, keep in mind that (a) I've been engaging with everyone else's suggestions and concerns, (b) I've proposed solutions to more than one important problem, and (c) everything I've suggested can fit into 100 lines of code for the programmers and 1 menu screen for the users--it's only complicated to think about; it's not necessarily complicated to make or use.