If you have code for an Arudino, you can make a board that uses an AVR microcontroller (made by Atmel[0]) with that same code. It may be possible to use a cheaper AVR if you don't need the same functionality (eg, if you aren't using hardware pulse width modulation, there are cheaper chips) with only slight code modifications.
Absolutely not as it would be too expensive. It looks like the Arduino is used to drive a couple motors. You could do the same thing with any inexpensive micro-controller. It's a pretty cool, self contained design though.
[0] http://www.atmel.com