Ok, I changed the order. But still. Here's some goings on in the outside world for inspiration.
The FTDI FT232 is (I guess) a very popular USB to serial converter. There's an article here about how windows made a driver to brick fake chips. Fun way to stop hackers, set their chips to "don't work."
This article is just titled like a hilarious joke from the past. It's called "What is This, A Microcontroller Board for Ants?" (Yep, Zoolander). It's about an ATiny85 board where the board is slightly bigger than the chip. Kudos for saving space (if I need a small arduino, I know where to go).
There is a MakerBot equivalent for a CNC machine. It's called Carvey. Article is here.
There is also a confessions of a hardware startup page. I haven't actually read it, so I do not condone what is said there. I will read it later and find it by posting it on my blog.
One of the most expensive parts of an arduino is the USB to Serial converter. These typically cost around $15, and considering the fact that the electrical components required to make an arduino compatible (ATMega328p chip, 5V regulator, capacitors, resonator/crystal, resistors) total around $3.48 for 1 or $2.70 when purchased in bulk of 100, the USB to Serial converter is about five times the cost of the other components (not including the PCB, which can vary in price depending on the footprint. a 2"x3" PCB is around $5 per PCB for a quantity of twenty at the time of posting).
Electronics-lab.com's Blog posted about a schematic for a USB to Serial converter (links to blog post and schematic below). A cheaper USB to Serial converter would be invaluable for creating lower cost arduino compatibles. Either that, or I have to use the same USB to Serial converter that the fellows who make the arduino use. They use an ATMega16U2 that has been programmed to convert USB to Serial, which adds another layer of complexity to the board than simply an FTDI chip whose sole purpose is to convert USB to Serial (more info at http://arduino.cc/en/Main/arduinoBoardUno).
The purpose of this search for a cheap arduino is to get it into the hands of as many children as possible to promote electronics education. While a $25 microcontroller (when bought in bulk) isn't prohibitively expensive, if a cheaper alternative is possible and a little research helps towards that end, why not try?
Electronics-lab.com USB to Serial Converter Blog Post: http://www.electronics-lab.com/blog/?p=21327
USB to Serial Schematic: http://www.obddiag.net/usb-2-serial.html