this is my setup of an
this is my setup of an Arduino on a breadboard and it is fully working, and I am able to program the chip directly using an FTDI cable
http://lab.guilhermemartins.net/?p=539
this is an implementation of the setup above
http://lab.guilhermemartins.net/?p=686
Capacitors
The Arduino has small (22pf) capacitors near the crystal, which are required to guarantee that the oscillator starts up. But if you’re using a ceramic resonator, as shown in the photo, that device includes the capacitors so that you don’t need to add them. But, a ceramic resonator is not as accurate a frequency source as a crystal, which may or may not matter according to your application. Resonators are also a little bit cheaper than crystals.
There are also some capacitors for decoupling (not quite the same thing as smoothing), connected from Vcc to Ground close to the chip. The circuit shown in the photo omits these capacitors, which is a bad idea. The circuit will appear to work, at least at first, but may be subject to random crashes. The thing is, when a microcontroller crashes, how do you know whether your program had a bug or your hardware had a glitch? It’s best to include the decoupling capacitors and make a reliable controller for your robot.