For this sort of application, you're probably off spending $100 for a more capable basic board than trying to cram add-ons on an arduino. Something like a leopardboard (http://designsomething.org/leopardboard/default.aspx
) About $100 gets you an ARM9 with 128MB ram, 256MB flash, ethernet, SD card slot, and a VGA camera (with a bunch of other camera modules, up to 5MP, supported. (wow.)
Probably not a beginners system to program, though. Someone should make it run Processing.
(Heard about it at TI's "MCU Day" event. No personal experience. Maybe it does run Processing.)