It seems that some projects fall just on the wrong side of the microcontroller/PC divide power-wise. It sometimes appears that if you want to be able to display video and read from GPIO ports, you're either going to have to learn Spin and work with Propeller chips, or use a low-cost PC for the graphics and an Arduino or similar board to handle your sensors. Luckily, this isn't the case! Two products available at SparkFun and Adafruit can help you out significantly.
I am, of course, talking about the BeagleBoard and the Chumby. Both are Linux-based single board computers with a variety of expansion options. They have onboard USB and display capabilities, GPIO pins, and are fairly cheap (the BeagleBoard will run $150-200 depending on the version, and the Chumby hacker board is $90). If you need a powerful embedded computing ability, these may just be what you're looking for. Let's look at the specs:
The BeagleBoard is an open-source single board computer made by Texas Instruments which uses their OMAP3530 system-on-a-chip. It boasts an ARM Cortex-A8 processor, running at 600MHz, fed by 256MB of on board RAM (512MB for the xM version!). With on board DVI-D/S-Video output and an OpenGL ES 2.0 2D/3D GPU, this board packs a lot of punch in the graphics arena. It also supports I2C, I2S, SPI, MMC/SD Cards, USB, and RS-232 and JTAG protocols out of the box. It comes pre-installed with Angstrom Linux, ready to be hacked!
Chumby Hacker Board
Chumby, the ever-lovable internet media device, has been transformed into a powerful development tool for hardware savvy hackers. To encourage this, the Chumby team came up with the Chumby Hacker Board. Running at 454 MHz with 64MB of onboard RAM, the CHB is slightly less powerful than the BeagleBoard; but at $60-110 cheaper, this may just be what you need for a less resource intensive project! The CHB features 3.3V GPIO pins on a 0.1" spacing, perfect for general-use protoboards. NTSC video can be sent over the camcorder port, along with stereo audio; mono audio can be driven from an amplifier at up to 2W! The board has 3 USB ports and a MicroSD slot, and can communicate back to a host PC via serial. It comes with a custom 100MB Linux distribution on the included 512MB SD card.
Either of these boards can provide some intermediate processing power for embedded projects, without requiring a dedicated PC; for more resource-intensive roles, the BeagleBoard is preferable but the Chumby Hacker Board certainly won't break your budget!