I'm not trying to discourage anyone, only to make Paul aware that before you plunge into any project, you have to consider your options first.

What I meant is: Well developed MP3 players are readily available in shops, and it makes no sense trying to invent a crude one yourself.
I'm not a hobbyist, and I occasionally program 8051's for business purposes in case a commercial solution is not around. But my boss would shoot me if I would pick up an 8051 derivative to start spending lots of hours to build a piece of equipment if a proven, ready made device was available commercially (if I woudn't have done that myself already).
The SND chip is in fact a chip which has exactly what I mentioned: a hardware MP3 decoder and an IDE interface. Also turns out, Atmel has already done the really hard work by supplying a vast support library, making it a not-so-difficult pet project, albeit not very educational either.

But really, congrats nevertheless, and good luck Paul :)!