So this isn't specifically arduino but I'm looking for a way to randomly (or semi randomly) fade a RGB led between colors. What I'm thinking is like 3 555 timers that are somehow faded back and forth making a PWM signal that goes to some mosfets. The reason I'd like that is to keep my cost down. A knockoff arduino is minimum 18 dollars which isn't that much but I'm on a very tight budget and when I have 4 or 5 projects at a given time the price adds up. A large percentage of my projects involve background lighting with LEDs so a cheaper solution would be awesome and I wouldn't have to keep moving my 2 arduinos from one project to another
Yeah I was thinking if I got a bunch of the 5 dollar chips and one serial converter from sparkfun (like 20 dollars) I could just program it and leave it in system with about 8 dollars total of components. I just need to figure out what the minimum amount of wiring I would need to do for 3 fading outputs. Possibly even a cheaper less powerful chip. I'm just not super good at designing circuits yet 
Yeah I know about the power handling for the leds its just the capacitors and making sure that I have everything for the logic side of the circuit. And I know about those but I like having more control and I often do beat detection with it by using the a/d converter for processing the line in from my computer audio which makes for some really cool effects