A while ago I built an Arduino based color organ / sound reactive light system. It uses the SparkFun 6 channel PWM power driver shield along with the SparkFun SPectrum shield that uses the MSGEQ7 IC.
Here is a Youtube video of it under development: Mike's Color Organ - under Development
Here is a video of the completed Color organ set up in my living room: Mike's Color Organ
Here is an article I wrote about it, complete with the source code: http://mikestechblog.com/ubuntu-antenna/build-an-arduino-color-organ/
This was inspired by going to a show of a local band at a coffee shop. I said something about a Color Organ, and the owner of the coffee shop was thrilled with the idea, so I built one for him.