Is this an inaugural with plans to make it a tradition? If so you should consider a trophy.
I don’t think prizes are necessary since everyone is going out for the golf and memories. If you want to put some skin on it, loser pays for the final meal before departure.
If you want to go with some swag, you can go as simple as a custom tee from Western Birch or a Winston towel with embroidery of player name and year done from the local mall kiosk or something. I know I would use the tees or towel for sure and it is cheap enough where you aren’t inflating overall costs to the point of ridiculousness.
As for format, I know I would want to play my own ball whenever I can. I would consider a four ball in the AM, and an alternate shot in the PM to conserve energy for the singles day. You could throw a scramble in the PM as well as everyone is getting their strokes in.