Best 5volt power supply for atmega328...???

If the 7805 has ripple on the output, there are a few possibilities:

  1. You are not using the recommended capacitors, or the wires between them and the 7805 are too long, so the 7805 is oscillating.

  2. You are drawing a lot of current from the 7805 and you don't have an adequate heatsink, so it is getting too hot and the thermal current limiting is kicking in. [This happened to me once with a 7912. Fitting a better heatsink fixed it.]

  3. Your 7805 is faulty.

How much current are you drawing from the 5v line? Bear in mind that some things can be run from the unregulated input to the regulator, e.g. LEDs switched by transistors, LCD backlights, relays etc. So you may be able to reduce the current needed from the 5v supply to a value low enough to use a TO-92 regulator.