I added a project detailing my version 1 design of the Hobbybotics I2C I/O Expander based on the Philips PCF8574A.  The PCF8574A provides eight bits of I/O at the expense of only two micro-controller pins.  Analog pins 4 and 5 on the Hobbyduino double as the SDA and SCL I2C pins, respectively.  Check out the project here.