I would recommend:
Diamonds
Other Enchanted Armor
Iron Swords
Potions
No, in my opinion that is pushing over the line. First of all it's unfair. If your reached the chest first, it's an immediate win basically. If you had enchanted armour, then you'd be over protected. If you had an enchanted sword, it'd make it way to easy to kill someone. Iron swords can be crafted using sticks and iron ingots. There is almost no point in adding Iron Swords if you can obtain iron ingots and sticks. Think about how easy MCSG games would become with all these possibility's that you have recommended. Potions???
That's way to pushy. Ex : if you poisoned someone, that would most likely bring them vey low in health and then 1 swing of a sword would finish them off. If you had potions, they would have to add milk buckets into MCSG chests. I could go on and on and on complaining about why your recommendation is a very bad idea
. It would make the games very very unrealistic as well and the games would go by way to quickly.
I understand if your just joking around but if your not there is no way this will ever happen