I have been powering my arduino with a 12v 1.2A supply without issue. However I just added ladyada's ethernet shield, and now the voltage regulator gets too hot to touch after only 20 - 30 seconds of use. The boards works fine, so I don't think it's a short.
I was thinking of trying dropping the voltage, as my PSU also supplies regulated 5v (it's an old lacie hard drive supply).
I know the specs mention a minimum 6v for the diecimila, but if I connect it straight to the Vcc (I guess bypassing the regulator), will this be sufficient?
What VR device is in your 12V supply? Does it have an adequate heatsink?
Add the demand currents for all current sinks circuits. Check that against your supply output. If demand is below supplyt then run with it. If you are not comfortable with the heat you can use a fan or provide a more efficient heat sink. Hot to human touch is generally well below the temperature mosty VR devices can tolerate, but check your spec sheet and measure the temperature to be certain if you are concerned.
An Xport module, for example, will take 120 to 250 milliamps of current at 3.3V.
So, in short, when you add this to the Arduino you need drop (12V-3.3V) 8.7V across the regulator(s) to get that 3.3V. You put 12V in, and the 8.7 goes up in heat, more or less.
Dropping this 8V* at 100ma will generate .8Watts of heat. Dropping 8V at 250ma will generate 2 Watts of heat. That's why your regulator is getting hot.
Time for some power supply engineering. I'd switch to an external 5V supply to run the Arduino, which I assume gets regulated down to 3. for the Xport.
That way your heat losses will be much smaller.
all numbers very approximate, your mileage may vary.
Is your 12v 1.2A supply regulated? if not it may be putting out some ware around 16 volts with a light current load on it. I would try to scrape up something in the 8 to 9 volt range. that would reduce the voltage drop across the regulator and lower the power dissipation. Ideally you want to put only 3 to 4 volts more into the regulator than the 5 volts that you want to get out in order to keep that un-heatsinked regulator cool. In a perfect world, you would get yourself a LDO "Low drop out" regulator and connect a 6 volt supply, that regulator will run "too cool for school".