I smoked a few Atmega328's working on a recent project. I was working with an automotive relay that switched a car horn. I had a diode across the coil, but nothing on the car horn (since the relay isolated it from the rest o the circuit). It worked great until I added a 12v piezo siren to the project as well. Since I was using a transistor to switch the piezo, I had to connect the ground for the atmega to the ground for the 12v supply. Thus, my circuit was no longer isolated from the noisy 12v supply and car horn (DUH). Luckily I bought the 328's in bulk so I only burned up about $6.
There was also the incident with a 60" plasma TV and its 200v power transistors that I have already mentioned on here.... That was a bit more costly. I don't know what the amperage was on that power supply, but it produced a significant fountain of sparks.