A fully capable ARM chip able to control a complex thing like a mobile with it's full color displays and wifi, 3g bluetooth etc will cost a minimum of 150 pounds(and that's just for the chip), and so for hardware hacking isn't really worth the investment, as no-one will buy it for £150 when you can buy a proper ARM based phone at Tescos for 15 pounds.
But an arduino can still be the basis for some kind of cheap system, perhaps one that costs only around 50 pounds to prototype.
What I'd like to see though isn't a project to make something that mimics phones, but is to make a functional leap and create the simplest possible thing that can serve as a household computer, taking the most basic functions: communication, data transfer, storage and interface, and concentrating on being low power, cheap to make and open in design.
Things to use:
- Voice: OCR to Voice, voice to text etc, getting rid of keyboards. (Although the processing power needed for this might not make it a good idea. Maybe it would only record messages, send them around and play them back.
- "Touchscreen" or head tracking as with http://johnnylee.net/projects/wii/ and other ideas.
- Casing: Recycled materials. Tire, sensors from old electronic items, mass produced plastic packaging etc, natural materials such as bamboo and balsa.
- It could use sd cards for storage, send data over audio channels, and we could copy data in and out using the miniusb.
- Could a photo sensor and piezo combine to create an interface perhaps? The photosensor would do distances, and piezo would check for sound. Sound + distance can easily reproduce the rubbish but simple keypad used in mobiles.
- Display: The tellymate! http://www.solarbotics.com/products/50652/ but if it can plug into an old flatscreen monitor, all the better.
With the basis of an arduino, or of it's cheaper clones, an open hardware device could be created able to plug into a monitor or a television and use a modern but inexpensive interface such as IR gestures or touchscreen, powered by AA batteries or crank power!
So here are some links I've collected to do with ARM chips and netbooks:
http://news.cnet.com/8301-13505_3-10198879-16.html Ubuntu triumphs in the modern netbook market.
http://www.embeddedarm.com/software/software-arm-linux.php A linux ARM distro for a specific chip, price TBC...
If a workshop was set up to make something that sold for £40 pounds or less, people would buy it. But the sets could take the price down to half of that if it was just simple parts and lots of inventiveness...