Thanks for the insight with your knowledge of the subject. You are right, these strips are not readily available for purchase. I did find a source that sells the strips for about half (including shipping) of the cost to be found here in the states. I have found a source in China where I bought a couple hundred of the ICs for just under a quarter each though. This will get me going into making my own. Since there is already a library for the Arduino for controlling the strip, the timing is not an issue.
I agree that the quality is not top notch and certainly not what one should expect for the current pricing of around $35/meter but making my own PCBs for this lighting will allow me to better balance quality with cost. The downside is that it will not be a flexible strip.
Another LED driver IC I've looked at and purchased a few of is the DMX163. It is the IC used for the colorduino and is more flexible than the LPD8806. It will control up to 8 LEDs with constant current set with 3 resistors (one for each color) and can sink 60mA for each. It has PWM control, 2 banks for grayscale data (6 bit and 8 bit) and can run at a frequency of up to 20MHz. The downsides are, like the LPD8806, it is not readily available. It also costs about $4.50 ea in low quantity.
Overall, I'm not looking to do many thousands of these. I have 1400 5050 RGB LEDs and intend to use them in some fashion for myself and some friends. I also have 200 LPD8806's and 4 DMX163's. I will now have to order a sample of WS2801 ICs to compare to as well, I guess. 