One of the most popular on-line games on Yahoo is Literati. It is just like Scrabble. I described this game to this list several months ago and invited everyone to join me for a game which we played one night.
It's a great game to play with friends or students. While you play there is a little 'chat' window where you can talk about words, the weather, whatever. I think the maximum number to play is 4 or 5 but others can join in to watch the game. You could even have the extras join the players and make 'teams' so that you would have 4-5 teams.
I think any activity that works with words is helpful for students. Before a student lays out his tiles for a 4 letter word he has run through his mind hundreds of possible words. Every spelling combination that seems like it could be a word is followed by the thought "Is that a real word? What word is it and what does it mean?" It is a delightful way for students to review vast amounts of vocabulary.
I had a private class with some executives (a banker, a manufacturing CEO, a company president and a head of a law firm). They liked it when I pulled my mini-Scrabble game out but were thrilled when they learned you get points. The lawyer was so enthusiastic he was trying to cheat and the president had to guard the tiles to stop him.
Scrabble is one of the most popular games in the U.S. So I'm sure many students will enjoy it.