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Here's a great music project you can build with an Arduino... Beavis Audio Research writes -

This is my first build using an arduino microcontroller. I wanted to create a simple tone output device along the lines of the 555-based atari punk console, but using solely the mcu as the tone generator. Unfortunately, that was just too simple a task with a microcontroller to play with--it was done in about five minutes and my mind was already forging ahead with a bunch of stupid ideas.

Since coding the arduino is simple, I decided to set up eight tone "slots" and then sequence through them. A frequency knob would control the freq of each slot, and a separate tone duration control would allow me to get awesome eighties video game tones. Figuring out the component wiring wasn't too tough once I'd figured out the basics of reading analog pots and digital switches.