|Today as i was installing decoupling caps on a circuit board i thought to
|myself: "Why dont the IC manufactures just incorperate a decoupling cap
|right in the ic itself?" Any one have any ideas?

Placing a cap on the die itself would be 'theoretically' possible,
but extremely expensive.  One factor which would be something of a
'killer' is that on most of the chip, one wants to minimize capac-
itive coupling between layers (since stray capacitance will slow
things down and increase power consumption).  Unfortunately, if the
chip-making process is optimized to minimize stray capacitance, that
will make it difficult to get much capacitance where it actually is
wanted.

A somewhat more plausible idea would be to incorporate a small cap
within the package, but have it external to the die.  For some app-
lications, this approach might make sense (putting multiple parts in
a package isn't all that hard as evidenced by the 12CExx parts) but
it would almost certainly cost more than an external cap and there
wouldn't generally be enough benefit to justify it.

While the need for bypass caps may be somewhat annoying, it's usual-
ly not that bad.  For proto-board projects, bypass caps can sometimes
be handy: if the board has power and ground rails running through the
center of the chip, placing the cap under the chip's socket allows
for very short lead length *AND* the cap leads can conveniently be
used to connect the power/ground rails to the PIC's power/ground pins.