5v wall power supply, do I need capacitors?

I have a power supply that plugs into a wall and then into a device, which was a wifi modem. The voltage of the power supply is 5v 1.2A. Can u use this to directly power a stand alone atmega328 or do I need to use capacitors to protect it from spikes? I assume I don't need a voltage regulator because it is already 5v but I am not too sure about the capacitors?

Or do I need a voltage regulator? I'm confused?

Any1 :(

If the supply outputs 5V plus or minus about 0.2V DC (measure to be sure) it will power a 5V Arduino through the 5V input (not Vin or the power plug). Caps across the power supply can't hurt, 10uf to filter slow changes (mind polarity if electrolytic) and a 0.1uf ceramic for higher frequency noise. edit: I just read a different post that has to do with using an external 5V source and it is mentioned that you should never power through the 5V input and have a powered USB cable plugged in at the same time. Either have a USB cable that does not supply power while the 5V supply is plugged in or power the Arduino through the power jack or Vin with a supply of 7.5 to 9 V.

groundfungus: If the supply outputs 5V plus or minus about 0.2V DC (measure to be sure) it will power a 5V Arduino through the 5V input (not Vin or the power plug). Caps across the power supply can't hurt, 10uf to filter slow changes (mind polarity if electrolytic) and a 0.1uf ceramic for higher frequency noise.

Read the OP again. He's using a standalone ATmega 328, not an Arduino.

Right.

I always have an input capacitor where the power cable comes in, if its from a decent switching regulator/wallwart then simple 10uF electrolytic is all you need. If your device uses lots of current, then use a bigger cap, like 100uF.

Ok awesome thanx guys