Update: Guess I should have read the README better! I am ordering the ATMEGA328P.
No worries. Besides, I had forgotten I added that sentence to the README.

One disadvantage of the xmas-icetube firmware is that it has quite a few features. I remember being a bit sad when the code would no longer fit on the ATmega168v that comes with the Ice Tube Clock. Another disadvantage is that there are many menu options. The menus are organized fairly intuitively using a nested structure, but it still takes a little time to discover what everything does.
As far buying a chip, I recommend the ATMEGA328P-PU. That's the chip used for Arduinos, and works well in the Ice Tube Clock. At one point, I tried the other chip (ATMEGA328P-MN?), but the crystal oscillator was unstable and the clock didn't keep time reliably.
Ps. Could you add DST support to your firmware?
By default the firmware is in manual DST mode. In the menus, under "cfg regn"/"set dst", you may toggle "dst on", "dst off", "dst usa", and "dst eu". The first two options allow you to manually enable or disable DST. The last two options automatically enable and disable DST according to US or EU rules. When setting time, the GPS code uses the current DST setting along with the GMT/UTC time offset in hours and minutes, as specified under "cfg regn"/"set zone".
Writing more generic DST code is on my to-do list, but is currently a low priority. If anyone uses the xmas-icetube firmware outside of the USA and EU, please let me know. Otherwise, I'm not likely to work on the DST code anytime soon.