Originally I was using a Duemilanove that was wired to a prototyping PCB that had some TO-220 MOSFETs for switching higher amperage power that controlled solenoids on the steering valve. I have since developed a couple PCBs that have everything I need on one card - power regulation, the ATMega, TTL-to-RS232 translator, valve driver MOSFETs, and some sensor inputs.
A vehicle that moves at 10 MPH will have very accurate heading data at that speed, but a tiny amount of heading error will drive you away from your desired path quickly. Getting accurate heading data will still require a yaw sensor coupled to a magnetometer or GPS.