Sending a balloon to the outer space is quite easy. The difficult part is to make sure that you can find it when it comes back, so the balloon must be constantly reporting its position. Extreme weather might cause malfunction to the electronics, so this is probably the hardest part.
For the tracking, I am planning on using an AVR microcontroller that modulates a standard AX.25 signal and sends it through a small VHF transmitter. Since I'm a licensed radio amateur, I can transmit in the European APRS frequency (144,800 MHz). The advantage to this is that the base station only requires standard amateur equipment (basically a 2m transceiver and a TNC or AGWPE). This also means others can help chase the balloon!
Currently I am in the phase of building the transceiver. I am evaluating Radiometrix's devices since they operate in amateur frequencies and have been used in similar projects before.
I am also waiting for an Arduino board to start developing the tracker software. The AVR will be responsible of reading GPS data, sending it to the TX module and other functions, such as triggering a cut-down mechanism in case the balloon never reaches its burst altitude.
The photo gear will be a Canon A570IS with CHDK and a variation of the intervalometer script, which instructs the camera to take pictures automatically every so often. Since the camera operates autonomously, there's no need to solder wires and trigger the switch externally. It's also less work for the "balloon brain" (the AVR) and less chances of failure (yes, recovering the camera only to find no pictures in it will be considered an absolute failure of the mission :)
The GPS receiver must be chosen carefully. The CoCom limits prevent GPS from being used with ballistic purposes, so all GPS receivers must stop reporting if they are over 18.000 ft. and move faster than 1000 knots. Unfortunately some manufacturers just shut down the device if either one happens. I am evaluating the Trimble Copernicus, which has been reported to work nicely over 18.000 ft.
I'll keep posting as I start getting things on my mail!