Personalizing Online Assignments for a Statistics Class
I found one possible solution that might work using the RGoogleDocs package. I am posting this as an answer only because it is long. I am still interested in better approaches, and hence will keep the question open.
Here is the gist of the idea, which is still untested.

Create multiple versions of each assignment using knitr/Sweave.
Upload them to GoogleDocs using uploadDoc.
Share one document per student using setAccess which modifies access controls.
Create a common Google Form to capture final answers for each student.

The advantage I see is two-fold. One, since all final answers get captured on a spreadsheet, I can access them with R and grade them automatically. Two, since I have access to all  the completed assignments on Google Docs, I can skim through them and provide individual comments as required (or let some of my TAs do it).
I will provide an update, if I manage to get this working, and maybe even create an R package if it would be useful for others.
I teach undergraduate statistics, and am interested in administering personalized online assignments. I have already solved one portion of the puzzle, the generation of multiple version of a question using latex/markdown + knitr/sweave, using seeds. 
I am now interested in developing a web-based system, that would use the various versions generated, and administer a different one for each student, online. I have looked into several sites related to forms (google docs, wufoo, formsite etc.), but none of them allow programmatic creation of questionnaires. 
I am tagging this with R since that is the language I am most familiar with, and is key to solving the first part of the problem. I know that there are several web-based frameworks for R, and was wondering whether any of them are suitable for this job.
I am not averse to solutions in other languages like Ruby, Python etc. But the key consideration is the ability to programatically deliver online assignments. I am aware of tools like WebWork, but they require the use of Perl and the interfaces are usually quite clunky. 
Feel free to add tags to the post, if you think I have missed a framework that would be more suitable.
EDIT. Let me make it clear by giving an example. Currently, if I want to administer an assignment online, I could simply create a Google Form, send the link to my students, and collect all responses in a spreadsheet, and automatically grade it. This works, if I just have one version of the assignment. 
My questions is, if I want to administer a different version of the assignment for each student, and collect their responses, how can I do that?