If you are looking for a bitcoin hardhack project to do have a look at this thread:https://bitcointalk.org/index.php?topic=76004.0
Mainly to make writing a command line interface to MultiBit a bit more interesting I am going to have a go at driving it over a serial line (to a HP50G graphing calculator). See the bottom post on the thread.
There are Arduino designs that drive a 2 line LCD and also a serial line to a PC that I almost considered using. It is a bit too much to learn to do though so would take me too long.
If you have a Arduino mega and fancy extending bitcoin use down to custom devices check out what I was looking at.
There is also a thread in the Development and Technical Discussion about smartcards/ dedicated custom devices here:https://bitcointalk.org/index.php?topic=7539.0
People have some great ideas but I do not think anyone has any implementations out there yet.