finally i have started to build a autopilot system, the idea is to use a co-pilot and a autopilot system to achive stability and navigation, i am stuck with the navigation part. i have lots of ideas hitting me but havent gave them a deep thought. with navigation i mean how do you all determine the heading and how you navigate through waypoints,
i thought , getting the ideas from experienced and wise will be nice to minimize my failure ratio.

If you check out the Ardupilot project at http://www.diydrones.com/ it should give you plenty of ideas and even source code to get you started at minimal cost.
It even handles stabilisation on the same board.