I was working on an Arduino style project the other day and needed just a couple of more pins. I really didn’t want to add any extra circuitry to the project so I looked at the Atmega328 and wondered how I could get more pins out of it. Then it dawned on me, simply remove the crystal and associated capacitors and use the internal RC clock rather than the external crystal. To try this out, I built one of our new Minuino Kits and omitted the crystal and 22pf capacitors.
In order to do this, I had to change some fuse bits on the ATmega, telling it which clock source to use.
Here is a screen shot of the only setting I changed using the AVR studio software; I chose Int RC Osc. 8 mhz.
Then to finish up, using my MKII programmer, I loaded a new bootloader onto the ATmega. Here I chose the Arduino Pro 8mhz 3.3volts (BTW, I have been running the board at 5+ volts) for both the bootloader and the IO board style when uploading sketches.
Here is the example sketch the blinks two LEDs connected in place of the crystal: