Thanks.  I do know about the raspberry pis, but I'm thinking even smaller: a tiny little custom board with only the bare minimum hardware required to run bitcoind.  Perhaps the ARM processor could still run linux, or perhaps in the future we could write a version of bitcoind that implemented its own simple OS (as is commonly done for DSP projects).  



I suppose you need enough RAM to pool the unconfirmed transactions, right?  A 64 MB chip could hold around 100,000 TXs.   Here's a 64 MB SDRAM chip that is only 6mm x 8mm in size and costs about $1.50: http://www.digikey.com/product-detail/en/AS4C4M16S-6BIN/1450-1077-ND/4531924