Despite the audio peak (VU) meter's simplicity, it is wise to visualize the overall flow in block diagram form in order to obtain a feel for how each section will come together. The micro-controller, being the heart of the audio meter, is placed in the center while the auxiliary modules are placed around it.

Relationship between functional modules for hardware
Since this project is a step into working with the analog world, it is preferable to start work on the analog portion of the circuit and then proceed onto working with more of the digital oriented side later on. The microphone, amplifier, and envelope stages are small enough to work on as a group, as will be shown by the end circuit, but treating them as separate units will work in favor of building a solid foundation ( Makes my project write-ups appear to be more thorough =p ).
The micro-controller portion of this project is software oriented and thus work on it will be in parallel to all portions of the project such as design and construction. This is because it is very easy to make changes in the software world rather than the hardware world although with my coding style, this may be under dispute.