Couple of projects to look into. Bear in mind, that those are general AVR projects (AVR is the type of microprocessor that the Arduino is using), and that the software will have no resemblance to the usual Arduino stuff. But still those are audio players realized with an AVR:
http://elm-chan.org/works/pcmp/report.html
http://elm-chan.org/works/sd8p/report.html
and generally everything on this page:
http://elm-chan.org/he_a_e.html