I get to do lots of 8 and 16 bit CPU embedded software in my travels. I found this debugger that's ultimately cheap and has some really darn good features.
http://www.noicedebugger.com/For my HC08, HC12 and ARM7 debugging, I simply love all the features you get for nearly free. These kinds of debuggers cost 1000s of dollars if you go with the big boys like codewarrior, etc. This one is all that but only $200.
It's just a debugger, so you have to supply a language compiler/assembler. I have good recommendations for those also.
