Many of us do exactly what you are looking to do - I normally just etch a PCB with ISP pins. Then mount the basic m168 chip, a 16mhz resonator, and a 7805 with a couple of caps - less than $6 for it all. The PCB will have input/outputs for sensors, alarms, etc to provide a complete stand alone project.
For power supply monitor and a temperature controller I added a LCD display to have a complete system displaying temperature, setpoint, current, voltage, etc.
Easy to do, and sure does make a neat project.
Ken H>