So what is the best thing (in your opinion) that you have done with Arduino board?
I begin with my recent project - talking temperature meter/monitor. Components i'm using are Arduino Duemilanove, temperature sensor LM35CZ and a small speaker. No shields or extra chips. Although sound quality isn't the best, for me its fine.
Here is the topic: http://www.arduino.cc/cgi-bin/yabb2/YaBB.pl?num=1277389233/0
I once got 5 PCBs with LCD on them, plus other stuff, from a surplus store. I then tried to use my iron to take out the LCD. Made a big mess with the wrong (too big) soldering iron tip. Then I learned about desoldering irons and bought one from Radioshack. After a bit practice, I got all the LCDs, all 5 of them!, all HD44780, and all in mint condition (plastic film still on) with 40*2 characters. Tested them with arduino. Felt like a rich man for a split second with my stash of LCDs.
Having the idea of eventually buying the board is, for the moment, the only thing I did with the Arduino. (or the trademark) Im pathetic, I know, but I have more important thing to do.... ;(
Building a digital clock using a 4-digit LED display with a breadboarded Arduino. Figuring out display multiplexing and (clock) interrupt handling was fun. Keeps pretty good time too. That's the best I got right now.
I've interfaced with Amiga/Megadrive/NES/SNES joysticks/gamepads.
My buddy at school interfaced an arduino to an NES. He used it to "play" the game from a predetermined "video" produced from an emulator. This required an SD card as well. However many fps(i think 25+) and 8bits for each frame(8 buttons) for the entire game! Pretty cool to watch it work. He ended up calling it his project for one of his classes...
Not sure about coolest, but my latest project was to track this by putting an arduino with an Argent Data radio shield in the nose. Tracking was 1s updates with X and Y from a GPS and Z from a barometric pressure altimeter.