Arduino on the ATMEGA168

by the way, the dongle programmer thing i'm using is the AVR-PG1. What programming software should I be trying with this dongle, the olimex AVR-P28 board and the ATMEGA168? I'm totally new to microcontrollers and the AVR world, but I have extensive experience in digital electronics, usually making things happen with flip flops, logic gates, and what not. the arduino board makes things so much easier, but I need a little more memory to write routines to drive an LCD display.