The first advice- for space (and cost) saving, use Surface Mount Technology- it may look a little hard to solder, but in reality it is much faster to mount then through hole. I personally use all chips in TQFP/SOIC packages, 0805 resistors and capacitors, SOD80 LL4148 and even low profile aluminium capacitors. It really save space. I will attach board to show it.
About schematic- I really can`t find 7833 datasheet ( it must be linear. regulator, but it appear not to be too common). If You have datasheet on it, look there, if it is Low Drop Output reg. or not. The thing is average 7805 requires input voltage to be at least 2 Volts (really more) bigger then output, here You have only 1.7 ( I use LM1117-33, it can give 800 mA and can be fed from 5 Volts, i.e. it is LDO).
7805 requires 4.7-10 mkF aluminium or (better) tantalum capacitor at the output, and same with 7833.
Each digital chip should have 100nF ceramic capacitor close (as close as possible) to its POWER leads, ATMEGA have it, but other two lack of it.
If it is possible, connect crystal capacitors ground wires directly to GND of MCU, or close to it. Crystal capacitors are connected to the same ground wire as PWM. Try to avoid it ( if possible).
If You have precise analog sensors, special care must be taken about AGND (GND2), AREF and AVCC pins. Try to decouple AREF and AVCC with 10 Ohm resistors (from VCC) and 100 nF ceramic+ 10 mkF tantalum capacitors (caps to AGND). Also AGND should have only 1 connection point with GND- under MCU package.
10 KOhms for RESET resistor is a little too big in noisy environment, try something from 5 to 7 KOhms. Also RESET must be grounded with 100 nF capacitor (required in noisy environment).
Some tricks about Laser and Iron Technology (LIT). Traces shouldn`t be too wide (until You have high currents), 0.35 mm is OK. The thing is, the thiner trace more toner you have on it (it is especially important for SAM...G printers, which are poor on toner ;(( ), so You have 0.6mm etched trace or 0.35mm OK trace. Also paper is very important- I use film for B/W laser printers- it worth nearly nothing, but works very well.
For more info, see AD, TI and other application notes, AVR application notes and a lot of different info in the net. Also Admin posted few amazing links about PCB tracing.
Hope, this helps.
Here is my example. Don`t look on some wiring (aaaargh SA.....G), it works well