Is that possible build LCD Touchscreen project using AVR chip? Yes, you can do that. Evert Dekker has build AVR LCD Touchscreen project with ATmega 128 and compile the software with Bascom AVR.
The big advance of a touchscreen is that all is in the software. If you make the traditional keypad and you need an extra key, or maybe change the key layout. It’s not possible, or It will cost you money. For the touchscreen just write some code and finished.
Documentation, Source Code And Schematic