I think the PIC10 series are probably cheapest and readily available but it really depends on what you want the uC to do. More legs and more performance = more costs.
I think it's a funny way to consider microcontrollers.
What do you want to do?
Once your specs are defined, it will help you starting something.
Otherwise, you have many sub-dollar processor. They will certainly all be able to
blink a led or a few leds, but you should decide first what you want to do.
I wanted to load at least 150 lines of code (2.8 kb) to a max of 5 kb (max) and control 4 servos .. (optional: it could also read from accelerometer) .. I am trying to bring the cost to as low as it can get.. freq comparable to atmega 328 is preferred
150 lines of code 2.8Kb? Are there complex math from math.h included?
In any case, ATmega48 and 88 belong to the same family with ATmega328. 4K and 8K flash respectively. From the AVR family, I can advice for those two.