I think in case of a microcontroller that runs code from flash, the difference between LGPL and GPL are effectively 0. The LGPL is more permissive in terms of dynamically linked libraries, but I would argue that a .hex file is statically linked and therefore the LGPL also requires the source code to be released. The license used by avr-libc only seems to require the inclusion of the copyright note as posted before.
But of course I'm not a lawyer.
When looking at adafruit and the likes, I have a gut feeling that going fully 'open everything' is not the worst choice. Of course you must make sure that your product is unique and fit to be released into the wild (*), the documentation should be comprehensive, there should be various known-to-be-good examples and there should be a place for customers to direct their inevitable cries for help to. Everybody should know that it is You who made this thing and not somebody else trying to sell it for 5 bucks less. One fine example for this is one thread on adafruit's forum named something like "You bought your kit on ebay?". It clearly states that they will under no circumstances bear the burden of giving support for rip-offs, while the 'other guy' happily takes the money.
(*) there shouldn't be any of these insane 'upload doesn't work' issues for example. One way to avoid that is to explicitly recommend using a very affordable ISP for transferring code to the device (hint hint). Of course a bootloader will be on there as well, but make it clear that it is potentially a source of frustration.