Full disclosure: I have never played Settlers of Catan (simply due to time constraints). But I have watched the insanity, passionate rivalry, and joy it has brought to so many of my friends as to be able to endorse it as a great way to spend a couple of hours.
But to really step up your game, try doing what Aaron Day did for the Summers Woodworking 2 x 4 Challenge, making an entire game set (board, pieces, dice, CARDS) from a single 2 x 4.
With the exception of making the playing cards (here made by soaking plane shavings in water, ironing them, and mixing them with a form of contact cement to mimic standard card-stock), the entire process is relatively straightforward. Watch the video below or check out Day's blog for more unique woodworking ideas.