This mood light is super simple to make and all the parts can be purchased online for about $5.00 total (not including the Arduino used to program the chip).
This is a contest entry in the LED contest with Elemental LED and the Hurricane Lasers contest, so if you like it, vote!
EDIT: I have changed this instructable so that it is a NIGHT LED Mood Lamp. It now only lights up when the ambient light in the room is very low (at night with all the lights off). You do need an LDR and a 10K ohm resistor to add this part though. If you want it to not have this feature, just remove the LDR/10K resistor part and connect Analog Input 3 of the ATtiny (pin 2) straight to ground.
Step 1: How does it work?
The way I got around this was by using software PWM. This means that I can fade in and out of all 3 colors using any of the pins on the ATtiny.
How software PWM works is by setting the pin HIGH and then LOW at different rates so that the LED looks like it's dimming. This is called Persistence of Vision or POV (for more on POV, see my instructable here). The LED blinks so rapidly that the human eye can't detect that it is flashing at all, and it sees instead that the LED appears to be dimming.