I've started a project using XBees to control lights. A simple on-off (Zigbee Home Automation Protocol, on-off cluster 
) light switch. My idea is to use a simple, normal light switch and add a 328, a current sensor, a 10A power relay, and an XBee to control a light. There are a heck of a lot of problems with this idea though and I haven't overcome all of them yet.
For example, I can easily turn on a light, but how do I know it is actually on. I plan to use a latching relay so I don't have to supply current to it all the time and once it latches, I don't know what its state is. Especially if the power goes off to my house (happens frequently during the winter). So, I have to be able to sense current to the light and that isn't easy given the range of current various lights use. Those little CFLs pull around a tenth of an amp and a string of Christmas lights can pull several amps. Sensing voltage won't work if you have multiple light switches to turn on a set of lights like hallways and jack and jill bathrooms.
Right this second, I'm waiting for some parts to come in to do some more experimenting with various ideas on how to tell if the light is actually being sent power. I've found various current sensing devices, but don't know how they work yet and I came up with a way to sense AC current through an optocoupler, but the device hasn't arrived. This project will probably take another couple of months to get a prototype running so I can do some extended tests.
I have a thread started where I ask for advice on this project http://arduino.cc/forum/index.php/topic,130243.0.html
But, if I can get it to work, it would be so cool to have a minimal arduino hooked to an XBee that controls a relay the size of an X10 wall switch. I could even sense the current running through the device and report it. Set timers inside the switch and let it run itself.... You can see the possibilities.