Yeah, if you're going small, I'm thinking small, sealed enclosures built with some 3/4" MDF. A 4x8 sheet of MDF will run you about $20 and that will be MORE than enough for all of your lil satellites.
I think it would be best to go for a two-way design utilizing a 4" midbass and a 1" tweeter. A small full range driver could work (like the ones Bose uses), but then it won't sound as good. A 4" driver in a two way will still be tiny but the sound quality will be much improved.
Hi-Vi (the parent company of Swans speakers) makes good drivers at a nice price. Here's a 4" midbass that would work well:
Parts Express #297-434
And here's an inexpensive Hi-Vi tweeter with a small mounting plate.
Parts Express #297-408
Manufacturer's Specs:
http://www.swanspeaker.com/product/htm/view.asp?id=28
The price on the woofer is $17.19 and the price on the tweeter is $8.28. This leaves approximately $15 for crossover supplies, wiring, polyfill, and mdf (per speaker). That's not too bad.
If you can't find a good resource to build a crossover (there is software available that you could probably *ahem* "acquire" that would design a crossover for you), you can always buy a pre-built one. I would opt for the 2kHz model from PE, part #260-140.
Don't forget about the binding posts. Part #260-303 includes a little plastic "cup" like you see on most speakers.
Good luck with your project. I'm sure your parents will be impressed!
Edit: This is somewhat the look I was going for, though obviously you would have a smaller tweeter plate if you opted for the above drivers.
Edit2: There's a project on PE with the same drivers, complete with crossover schematic. Search at PE for "hi-vi juniors".