Aref does not need to be connected if you are not using the analogue inputs.
However do not use pins directly to run the backlight. Use a transistor in between as the backlights typically pull many times the current that a pin can handle.
I understand that the pins max out around 40 ma whereas with the LCDs that I use, their backlight pulls around 180 ma. This would burn out the pin and damage the 328.
Check your datasheets to be certain.
Yes, I know, it would probably let out the magic smoke
. I will drive it using a Mosfet.
AVCC (20) to +5V.
AREF (21) not connected but you might put a 0.1 uF to Gnd.
AGND (22) to Gnd.
Thats great, thaks!