I have been working on stripping the arduino down to something that should cost about $6 by pulling the power and the serial off of the board.
The pic above is a dip version. If I went to olimex I could probably get the board cost to about 6 bucks for the board. So I thought about smt and eliminating the headers (which cost about a buck all told) This is where I am heading but it is not quite done.
This would be an 1″x1″ square with stk500 compatible ports on their sides like a card edge. You could solder directly or you could solder the headers on them. The power and the serial are consolidated into a header along with the reset. This will probably wind up reworked slightly.
If you want to monkey with it or finish the routing the eagle files are at.
http://www.digithink.com/embedded/hardware/gen-z/smt.brd
http://www.digithink.com/embedded/hardware/gen-z/smt.sch