Minimal ardunino setup?

Hi this is my first post, im sorry if im asking something that has a fairly easy to find answer but im also new to the Arduino.

Ok so I usually use a parallax propeller for most of my projects, but im looking for an easy to use solution for a supporting micro controller. I just need a simple system for handeling shift registers, i/o components and maybe some sensors. Basically im looking for something that is easy and fast to program and inexpensive.

I have some done some avr based projects in the past so I have an icsp programmer and a few avr chips not in use, one of those happens to be an atmega 128. I was wondering if i can run Arduino on this without a crystal. In AVR projects ive done in the past ive usually not used a crystall and just set the fuse bits on the chip to run at an 8mhz clock with the internal oscillator. All my AVR chips are a revisions so i think the 128 I have should handel 8hmz without a crystal. Would this be fast enough for the Arduino enviorment or do i really need 16mhz even if im not doing complicated tasks? Also does the AVR chips have bad drift on the internal oscillator or is it at least good enough accuracy to do serial communications? And where would I find the newest boot loader for a 128 chip? I know one of the Arduino compatible attinys may be a better fit for this but I have a 128 on hand, I also have a nice atmega16a on hand but I dont think Arduino runs on that right?

Yes no crstal with correct fuses, speed good enough (ex promini is 8 MHz), can fine tune speed for serial if needed, check avr-developers.com for the chip you want to use if not a standard arduino chip.

Ok cool thanks. Are the newest Hex files on this site? What do you mean by fine tune for serial if needed? Do you know how many ppm the ocillator works at?

If you have the IDE setup, it will pull the hex files as you bootload the board.
The serial transfers are based on the timed sampling of the incoming data - the internal clock can be fine tuned a little if needed to make serial transfers more steady.
I've never used the internal ocsillator nor fine tuned the oscillator rate - read the data sheet, or browse the forum some more.