I'm in India. Not going to pay $40 for shipping for 1 ATmega8u2 
Prove it.
westfw's comment proves it. In local shops, we get Attiny and generic Atmegas(that too in few select shops). Very hard to find 8u2 or FTDI cables. I couldn't even find an Arduino in Delhi to replace my dead one(which I bought from another city)! They only had clones. Neither do we have option of buying electronics online (unless we're ready to pay double). 
Thanks for the links Coding Badly and westfw. Seems the project which westfw provided used V-USB based AVR-CDC code in Coding Badly's link to implement USB to serial... If I can't find a fairly priced FTDI cable, I'll give that a try for some homebrew arduino.