my personal opinion is that the smallest Arduino for some sort of everyday use would be a RBBB or Boarduino, the cheapest one would surely be to get a Atmel 168 or 328 and solder a few parts onto it.
But if you just want to use the Arduino as everyone else for it's day to day purpose you should stick with a Duemilanove or Freeduino, maybe Seeeduino (as it is prototype board compatible).. i think that cost efficiency is best with those.