I've always loved the .NET Micro Framework. It lets you use the magical duo of C# and Visual Studio to create programs to run on teeny-tiny devices. I've been playing with it for ages, and even helped write a book about it.
Every year it gets better and more available. The latest version, 3.0 will run on a number of different devices. And you'll soon be able to use the Express (i.e. free) versions of Visual Studio to create and run Micro Framework programs.
The Micro Framework team have just launched Dare to Dream Different which is a development competition which starts with a great idea and then lets you build and promote it on embedded devices.
It looks like it will be great fun and you should have a go. But before you do, one word of warning.... students at Hull are going to enter this competition. Oh yes. I'm going to arrange some meetings and presentations about the Micro Framework in the department and and we are going to form some teams and pitch some ideas. So there might not be much point in anybody else taking part.
But then again, you never know...