Clothes integrated microcontroller

This is my project:
i need to make as small as possible circuit to be able to insert it into piece of clothing and providing 2 way communication whit my phone. Also i need it to be as cheap as possible.

So im wondering which wireless connection to use whit the phone, and what microcontroller to use?

So far i discovered that rf communication can be really small(size of a finger nail) and provide decend range(up to 50meters), but i wonder if i can use it whit phone integrated nfc module?

In case that would not work i would use bluettoh.

For prototypeing im using arduino, but for final product even arduino nano is to big(and expensive) so im thinking about deisignin an circuit from scratch using atmel avr controllers(attiny). So please and advices or experiences are welcome.

The very popular Lilypad was designed to be sewn into clothing and is Arduino compatible.
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