The point about cost is a very valid one, though. If a 6 cent processor can be made to work, and all it needs to do is make a toy go 'pow' or 'zap' depending on which button is pressed, then it's really not a bad solution. If the nearest PIC that could do the job is, say, 60 cents, then it's immediately priced itself out of the market.
On several occasions I've found myself needing to design a processor into an extremely low cost product, and I've struggled to find parts much below, say, $0.50 even in decent volume. I know there are plenty of Far Eastern manufacturers of cheap microcontrollers, but they have no presence in Western markets - no distributors, no technical support, and in some cases, no English data sheets.
Has anyone ever been called upon to design a toy, or a TV remote, or some other similar device that will sell in vast numbers but has a parts budget <$1? How did you go about it? Whose parts did you use?