A short while back, [Chris Anderson] released an Arduino based autopilot. It rings in fairly cheap and being open source, you can tweak away. To add more functionality, he's releasing a dual core version. Thanks to the second processor, it no longer requires an external hardware co-pilot. It uses an on-board GPS and features an ATtiny based fail safe. It's still under development, but he's made the design files available.
http://www.hackaday.com/2008/07/03/ardupilot-arduino-based-uav-autopilot/