Hello Kai , Erik

The reason why I had suggested using the 5V micro and the 3 V Flash EEPROM is because inputs of the EEPROM are 5V tolerant. The EEPROM uses SPI bus and as per ATMELs application note, SO ( serial data out) can be interfaced with 5V micro using a voltage level shifting IC MC74VHC1GT.Since I am using the level shift would there still be problems with such a setup.
5V micros are commonly available here , and also I can interface a 5V LCD readily to the 5V micro,which may not be the case if I use a 3V LCD.

Thanks
Thomas