As I've been Google searching and reviewing various projects where the '328 is being used on a breadboard or standalone on solderboard, I've come across a couple of designs that do not use a voltage regulator like the L7805:
The datasheet for the '328 indicates 1.8-5.5V for operating voltage. Is it safe/practical to run a 5V power supply directly onto the project board without a L7805?
Saving on the cost of installing the regulator and some caps is not at issue for me, but for a small project the space savings may be desirable.
TCWORLD:
Its fine as long as the power supply is regulated.
Heck, the power doesn't even have to be regulated. It just has to be fairly steady and in the acceptable range. You can use three AA batteries (about 4.5V).
Note: if you use a voltage below 3.8V you should switch to a lower clock speed (8 MHz rather than 16 MHz).