Our friends at Freetronics have brought to our attention a project by Dimitrios Kalfakis that uses the Arduino and its ATmega328 microcontroller in an interesting way: as the heart of an 1980s-style microcomputer. Like its three-decade-old inspirations, in particular the Epson HX-20, the DemUino is built into a keyboard and features a small character-based liquid-crystal display. Its well-documented successor, the DemiUno2, offers considerably more features, while Dimitrios has published an Instructable for building the original.
I've always wanted to build my own home computer, kind of retro-style, nothing fancy but with particular capabilities tailored to my preferences. So, I got to it with the ATmega328 MCU which is quite capable for my needs, although the wiring library sacrifices speed for convenience and error checking. The AVR-libc is always there, under the hood, to use at will for performance gain (which I did for certain things). The project had to be a minimum-cost-endeavour given the abundance of junk lying around in my home lab and my financial situation.