This instructable shows you how to create a very simple Arduino-based sequencer with nice features:
Multiple synthesizer projects has been done for the Arduino, but few has been able to utilize the full power of the Arduino processor. DZL from GeekPhysical wrote a 4 voice wavetable synthesizer that is one of more advanced software based synths for the Arduino. It has wavetables included (sine, saw, square and triangle) and envelopes to create beats.
[original story: Arduino Blog]