For all those electronic buffs out there, here is some interesting project that I found in the internet.

http://belogic.com/uzebox/

This is a cool single MCU powered gamming unit which could do a decent video playback as well. The best part is the entire project has only two electronic chips!! Lots of info available in the forums... Oh. BTW, it will not run your XBOX or playstation games just the good old mario kind of games.. 

If it can run Donkey Kong, Lemmings and Prince of Persia, it would cover the main games I grew up with

oh man why is that one has to always use atmel chips......pic rule 

Well, it depends on what you are comfortable with... At the end of the day both are just microcontrollers. Why not port the stuff to PIC..

I started with PICs. Microchip has great information on their products with ample application/reference designs.. not to mention their free samples. I believe that is one of the main reason why they are popular among hobbists. Atmel is on the other side but they do have some neat controllers. Look at the XMEGA range.. just pure bang for the buck!!.. They are cheaper than the AVRs with more computing power. Just a few interfaces like Ethernet, USB are missing...

-Ismail