My first Arduino project is "LambdaCan". I implemented a Lambda Calculus interpreter on an Arduino Diecimila. It's meant to be an absurd joke, because Lamdba Calculus is a painfully abstract formal system mathematicians and programming language theorists sketch on chalkboards when thinking about Turing Machines all day starts to seem just a bit too easy. I thought it would be funny to juxtapose this theoretician's toy with something as uncompromisingly practical as a microcontroller and stick it in a white can as if it were a fashionable piece of consumer electronics.
OK, maybe nobody but me is laughing, but figuring out how best to cram a Knuth linked allocator into 1KB of SRAM was a fun break from programming modern PCs with their GBs of virtual memory.
LambdaCan page: http://alum.wpi.edu/~tfraser/Software/Arduino/lambdacan.html