Attiny85

Vincent19:
How do I configure the attiny 85 to use internal 16MHz crystal ?

Download and install the core available from here...
http://code.google.com/p/arduino-tiny/

Get it working with your processor at 1 MHz.

Select the ATtiny85 @ 16 MHz (internal PLL; 4.3 V BOD) board.

Execute Tools / Burn Bootloader.

Enjoy.

By the way, can I confgure the atmega 328 to use internal 16Mhz oscillator too ?

No. As far as I know, the ATtiny85 # is the only AVR processor that can run at 16 MHz using the internal oscillator. The ATmega328 and all other AVR processor can run up to 8 MHz using the internal oscillator.

I thought atmega 328 just can have 1MHz internal

It has an 8 MHz internal oscillator that can be configured to run at 1, 2, 4, or 8 MHz.

# And siblings: ATtiny45, ATtiny25.