AVR-Chat

I recently started building an autonomous biped robot with 9 servos, 
IR command control and probably some object sensors (TBD)  The 
original had it easy, a PC controlled the bot with a wireless link.  
Instead I want to put all the behaviors in onboard code.  Kind of 
like a minimalist RoboSapien.

So, I started writing code in C for the PIC16F877.  For a number of 
reasons related to the compiler, the chip architecture and 
limitations on the free version of the $1k compiler, this isn't 
going to work.  368 bytes of RAM banked all over the place is a PITA.

I started looking at the ATmega32, the STK500 starter kit and the 
WinAVR package.  The only reason for the '32 versus, say, the '128 
is the package.  If I can avoid TQFP I will do it.  Besides, this 
bot only has 9 servos, a few analogs and probably 4 or 5 bits of 
digital input.

I am not anxious to change architectures but, if it needs to be 
done, now is the time to do it.

My questions at this point are pretty simple:  Is the ATmega32 a 
reasonable platform and will the WinAVR/AVR Studio 4 and STK500 work 
together to get this thing done?  Any particular gotchas that I will 
discover only after hours of debugging?

Any advice or links to code will be appreciated.

Thanks
Richard