There's a bunch of setups that will let you program the chip in an Arduino, then pull the chip out and plug it into a stand alone unit:
http://spiffie.org/kits/duinostamp/
You could get a cheap serial kit and just not build out the serial connection
http://www.nkcelectronics.com/arduino-board-serial-v20-complete-k.html
You could put together your own board with whatever parts you want
http://www.imagearts.ryerson.ca/sdaniels/physcomp/tutorials/Arduino_standalone/ard_hack.html
Seeeduinos (the 1.1v) are on sale at NKC for $16 right now
http://www.nkcelectronics.com/seeeduino-fully-assembled--arduino-compatible.html
It really depends on the application. If you aren't using 168/328 specific features, you can even drop down to another ATxxx chip and get an even smaller package (programming those can be a bit harder).