i found this ISD1100 http://rocky.digikey.com/WebLib/Wind...0%20Series.pdf

You can easily interface directly to PIC i/o. Those push-button serie can record up to 20secondes. Do a search on Digikey website regarding your need.

You'll also found some who work with I2C protocol. You need 2 i/o. SPI/Microwire 4 i/o.

So at minimum you'll need 10 output for leds, 3 for push button, 2-3 for chipcorder : max 16 i/o... PIC16F627/16F628 still a great choice.

the ISD must be better than a phone line surely? The frequency is higher according to the specs
yep a bit but don't expect a hi-fi recording. As i epriment with ISD4002, it's actually sounds like Real Audio or some Windows Media stuff... but on a small speaker... that will be enough.