i just finished a guitar effects pedal kit for arduino: http://www.openmusiclabs.com/projects/stomp-shield/
all the plans and code are up on the wiki if you want to build your own: http://wiki.openmusiclabs.com/wiki/StompShield
it uses the onboard ADC and PWM to do the audio in/out, but doesn't sound half bad. i would say medium-fi. 10b/32ksps in, and 16b/32ksps out. it also has 3-pole anti-aliasing filters on the in and out, which helps a bunch. there are a handful of examples in the library, but there is definitely more that can be done with it.