With a 7805, you just need an output capacitor. Typically, minimum 10 uF, but more is generally better (up to a limit of a few thousand uF).
With the 7805 I tried caps till 1000uf. But still then it was generating ripples which was causing the analog pins of the AVR to generate noise. Thats the reason I asked how to cancell that amount of ripple with the inductors..
Check out that $4 component I linked to, though -- it's a miniature switching regulator in a package that fits in the same footprint as a TO-220 7805, but it generates less heat.
Yes..! I have gone through this unit... I it good, but the problem is that it has the maximum current output till 500ma, where as I did a rough calculations and found that I may be drawing about 750ma..
How about using a LM317 or LM338...
I am only afraid of the R1 here, As soon as it gets disconnected the output voltage gets equal to the input voltage... 
This is how one of my Atmega got fried up...
Huh... The power supply is driving me crazy...
More over the circuit will be connected to a motorcycle, So I thing there may me a little noise in the input voltage of the regulator..
How about this in here..??
http://www.onlinetps.com/shop/index.php?main_page=product_info&cPath=12_50&products_id=103
The data sheet is here..