I spent about an hour on the phone with a Mackie rep today getting information about functionality and how to do what I want with what I have. It looks like I'll be getting rid of my M-Audio Firewire Solo sound card and picking up a Mackie Onyx 820i
http://www.mackie.com/products/onyx820i/ It retails for about $400, I'll be returning the Solo and getting a discount on the 820i so it looks like I'll have right at or under $200 in the upgrade; sweet.
This way I'll have the mic and guitar inputs as well as 3 stereo inputs for my microKORG, Kaossilator Pro and iPod Touch. I am under the impression (and the rep was quite certain) that I'll be able to take the line in of the Kaossilator, connect it to the AUX then just turn up the AUX per channel I want to effect. In theory this means I can also sample anything onto the Kaossilator from the board without the hassles of disconnecting and reconnecting things.
Even if the effects don't pan out to work as expected, I will still be happy avoiding a mixer/sound card setup for a single unit as well as gaining the ability to record 8 multiple tracks at a time. Yay post production options. I'll keep you informed if I go this route once I get it to discuss build, ease of use, etc.