Another way is to get an Arduino Mini or Pro Mini for the standalone - this has the advantage that its small, cheaper than a Duemilanove, you get to choose 3.3V or 5V.
Not as cheap as a ATmega chip, but much simpler - remember the ATmega for the Arduino is configured for a crystal oscillator so you'll need the crystal and perhaps a voltage regulator too... You might find the Pro Mini is a cheaper solution (and its so cute!)