Note: this post is from 2007, outbound links may be broken.
The $5 Picaxe Beatbox
You can do a lot of fun things with a Picaxe (microcontroller, a PIC programmed with a bootloader and BASIC interpreter).
I thought it would be a neat to build a toy that records and plays back beats like a simple drum machine. For those who are musically inclined, it provides endless hours of entertainment and even has practical purposes in learning and practicing music. Even better if it used less than $5 worth of parts and could be built in 30 minutes.