Your company has been using an 8-bit processor for years, and you have a new project coming up.  The question comes up: What processor should we use?
In this day and age, some would say that there is no reason to do an embedded design with anything less than a 32-bit machine.
These days, you can get full fledge 32-bit processors for less than $10 in single quantity!  In fact, you can get an ARM based processor for less than $3 in quantities!
Some 8-bit processors go for $14!  So why would you not move to a 32-bit processor?

As with most things, it depends on your application!
If you have a low cost application that does not require fast processing or I/O, not much RAM, etc… then a single chip 8-bit processor that costs pennies is clearly the way to go.
If you have a high-end data crunching router, anything less than a power packed 32-bit processor is foolhardy!
But what about the grey zone in-between?
Let’s say you have these requirements:
- 10/100 Base-T Connectivity
- Support for 2 serial ports
- Support for storing configuration items in non-volatile memory
- Support for storing Data on a removable media (SD/MMC card or such)
- $30 Processing Block budget (e.g. Pocessor, RAM, Flash, EEPROM, etc…)

There are a number of processors out there, both 8-bit and 32-bit which would meet these requirements

What should you base your decision on? A host of factors.  Here are two areas to look at.

Generally speaking, 32-bit processors will require more memory.
A number of 8-bit micro-controllers come with built-in memory (PIC, Atmel) up to 128 or even 256Kb.
For many applications, this is all the memory that would be needed.
Contrast this with a 32-bit processor, which will usually require external memory.  In addition, this memory will generally need to be 32-bit wide.  That’s 4 times the bus width of an 8-bit processor.  Also, mahcine instructions tend to be 32-bit wide, such that the memory requirements of a 32-bit processor are simply larger.

8-bit processor toolchains come with more for less.
In most cases, an 8-bit processor toolchain will cost significantly less for an 8-bit processor than a 32-bit processor.
You need a way to connect to the processor, to program the flash/eeprom and debug the software.
8-bit processor debugging devices range from $50 to $300.  This will often include the debugger.
In fact, 8-bit processor vendors will often provide a development environment for free.  This includes a debugger and an assembler (C compilers are usually extra, or 3rd-party provided).

Contrast this with a 32-bit processor, where a JTAG probe can range from $400 for a very basic serial port based probe,  $8000 for an Ethernet based JTAG device, to $12,000 for a processor trace module (a way cool and worthwhile addition if your budget permits).  Rarely will development tools from the vendor be free, but most processors have a GCC compiler port available.