A few simple questions about the Arduino/ATmega168

I do a fair amount of PCB design and my current project involves an Arduino. More specifically, I'm integrating an Arduinoboy in my project. Since I've never actually worked with an Arduino myself (sounds like a dumb project with that fact present, I know) I have a few questions that I haven't been able to find the best answers for. I figure here is the best place I could ask them.

In my project, there will be a switch in a 3.5mm TRS jack that will turn the Arduino on when something is plugged in or off when nothing is plugged in. A friend of mine told me I could use the reset pin to do this.

So if I were to use the reset pin as a power switch via the 3.5mm jack, would it offer me any power saving? Would stability suffer? And the big question is will the pins be set into a high-impedance state when it's off or in reset, virtually isolating it (or at least the I/O pins) from the circuit?

Would it be of any advantage to simply connect and disconnect Vcc from the ATmega by means of said switch?

Please note that I tried looking at Atmel's documents, but for some reason Adobe Reader claims every PDF I download to be corrupt.

Thank you very much for the help! :)

EDIT I just thought of something, would it be possible for me to put the arduino(boy) into a power-saving sleep mode via software by just modifying the source code? If so, would that put the I/O pins into a high impedance state like I mentioned above?

Thanks again!

Check this out:

http://www.arduino.cc/playground/Learning/ArduinoSleepCode