Gameduino connects your Arduino to a VGA monitor and speakers, so anyone who can write an Arduino sketch can create video games. It's packed full of 8-bit game goodness: hundreds of sprites, smooth scrolling, multi-channel stereo sound.
Gameduino is designed, tested, documented and the prototype is built. The videos were all taken from the real hardware - all the demos are on the Gameduino project page. What needs to happen next is a manufacturing run. Because the board uses a fairly fancy chip, a short production run is the only way to keep the cost reasonable. Your pledge gets you a Gameduino from this first run.
With a horde of Gameduinos in kitchens, garages and classrooms, the resulting old-school 2D mayhem should be considerable.
Gameduino is open-source hardware (BSD license) and all its code is GPL licensed.