Looks like the Fathers of Arduino have smiled on us UAV guys. David Cuartielles, one of the core Arduino developers, has posted a very welcome set of GPS parsing routines that anyone can use:
"I crafted three examples (basic, medium, advanced) featuring the use of different techniques to parse the GPS sentences. If you write something like a data logger, or a GPS toy, post your link here and I will be more than happy to include your code in the next revision of the library. Of course, if you found any errors or made any improvements, do the same thing.
This code compiles for Duemilanove and Mega, without any alterations. It works fine with the processors ATmega168 and up. Uses about 300 Bytes of memory space and is documented inside the code. Ah … there is a README.txt you shouldn’t miss; it explains how NOT to use the library."