Hi,
Thanks to all of you for your help! the comments are really useful and should help save me some headaches 
Regarding the input power of 12v, the only reason I'm using 12v is so that I can use the same supply for both the motor power and the Arduino). The motor can operate with less than 12v but it will go a bit slower (not really a problem).
Do you know if theres an easy way to take 2 different voltages from 1 power supply? or would using a different supply with 9v be any better instead?
Regarding the connections, there are 2 devices consuming power from the 5v output of the Arduino whilst the system is in wait mode:
- The Qik 2s9v1 motor controller requires logic power, it uses max of ~15ma when operating and can accept a voltage of 2.7 - 5.5v.
- The IR receiver (TSOP38238), I can't fully understand the data sheet for this but it looks like it uses ~3ma and can accept a voltage of 2.5 V to 5.5 V.
There are also 2 reflectance sensors (QTR-1A) connected to the 5v but they are not called by the program until the motor is moving. Each one uses 20-25 mA so I hope that this is not also consumed in standby mode.
I am also really interested to read the comment about monitoring the watchdog timer to reset the mcu if the system locks up, could you please give an example of how to do this in code?
Thanks again!
Paul