I haven't "done" electronics for a few years now, but it's nice to see what the chipmakers are coming out with. The chip prices and the level of integration you can get nowadays is pretty staggering. You used to have to solder together a whole board full of chips to get a simple CPU working, but since about 10 years ago there have been single-chip microcontrollers that include a little (256B-1kB) SRAM and enough flash for a program (1kB-8kB), and sometimes nice features like UARTs and ADCs. Typically you give them 5V and a clock crystal, and you're ready to go.
For a few years (I think), for US$2 or so you've been able to get the Freescale (previously Motorola) MC68HC908JB8/12/16 chips, which are microcontrollers with 8/12/16kB SRAM and built-in low-speed (1.5 MBit) USB device capability.
Now, you can get the 9S12UF32, a MCU which can not only act as a USB 2.0 device, it also includes ATA, smart media, MMC and memory stick interfaces. I guess this is what everyone uses to make USB memory keys and hard disk adaptors, but coupled with a single-chip MP3 decoder and some flash, you could make an MP3 player with one. (And I mean you - the hobbyist - as these are affordable and in hand-solderable packages - excellent!)
Philips just released the LPC3180, a single chip MCU that costs $8, runs at 200MHz, does floating point, and can act as a USB 2.0 HOST OR DEVICE. Oh, and it can run Linux :-)
If I had enough time and money, I'd start a company and build wireless mesh nodes out of LPC3180s and USB wifi dongles. Whoever pulls that off first truly deserves the associated geek bragging rights.