I just came across this at random, I don't know if others have seen it before, but it looks VERY promising!http://www.captain.at/electronic-atmega-mmc.php
It's code for a AtMega16 but I'm sure it could be ported to the AtMega8 - it uses the SPI interface which I beleive arduino can use yeah?
I'm very interested in getting SD/MMC support for the arduino up and running, but I don't have the programming skills to take what's on that page and get it working with Arduino. If anyone's interested though I'd love to help out - perhaps by me doing a 'datalogger shield' design to compliment their programming work.
This would I think definately be a selling point for the arduino. i showed my basic USB arduino to my boss, and since then he's bought two and now uses them as A/D converters for various sensors in his own light aircraft, but he has to carry his laptop to log the data. if there was a way to log the data on a memory card, readable by a pc later, that would be seriously awesome.