I know that I now show my total lack of knowledge about even the most basics, but anyway;
Would it be possible to use the Arduino to generate a reaver effect, on a signal from a microphone, and then parses this on to a pre-amp or something?
OK it would help if I actually knew what a reaver effect actually was but I will take it that it is some form of digital filter.
In general the processor is not powerful enough to implement a very complex digital filter, it really needs floating point hardware, more ram for the buffer and a faster processor to do the maths. However, you might get away with some limited real time echo / reverb effects if you drop into assembler.
It would also be useful if you got a D/A converter for the output, relying on the PWM output will only give you 8 bit data quality, that's about as good as a telephone.
My guess is "reverb" - reverberation.
Perhaps best to vibrate some springs and use a pickup, or do what Les Paul did and put 2 head on a real to real an inch apart. 
Thanks, I was of course meaning reverb :-[
Ha, in that case the actual reverb time is limited by the amount to samples you can store. There is only about 1K of data RAM free on an Arduino and assume you sample at 8KHz to get a top frequency of 4KHz then with the amount of memory you have a maximum delay time of one eights of a second, which is probably not quite enough.
Thanks for the help. I see that it's probably not a good idea to use an Arduino for this purpose. However, I think I will go for a setup with a V1000 chip from Cool Audio, and use the Arduino for controling a display++. http://www.coolaudio.com/files/public/V1000_DATASHEET.pdf (see page 11 in the document).