Arduino Debugger

• Hardware Debugging the Arduino using Eclipse and the AVR Dragon

• http://www.element14.com/community/groups/arduino/blog/2012/09/30/the-first-practical-arduino-debugger

• http://www.visualmicro.com/post/2012/05/05/Debug-Arduino-Overview.aspx

• http://www.instructables.com/id/Arduino-Debugging-Breakpoints-Tracepoints-and-E/

• http://emulare.sourceforge.net/debugging%20with%20emulare%20and%20insight.php

• http://diydrones.com/profiles/blogs/debugger-change-the-values-of-variables-on-a-running-arduino

• http://dangerousprototypes.com/2012/10/17/guino-arduino-gui-visualizerdebugger/

• http://www.instructables.com/id/EWE2BLNH7035YSZ/

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• Arduino debugging using the AVR DebugWIRE interface
• Modify an Arduino for DebugWIRE

Note you don’t have to recompile anything with AVR Studio, just open up the .elf in it, and AVR Studio will take over.
Then it’s just a matter of hooking up the Dragon and configuring it in AVR Studio. Configure your project 
to use the AVR Dragon (not the Simulator) and set the installed chip type  correctly (ATMega168 in this case). “Select Platform and Device”. .