montane featherlite, packs to the size of a grapefruit and weighs 180g. Costs about 30 to 40 quid
it's water resistant for about 10 miinutes of rain. If you wear it over bare arms it lets the water straight through
Yup - my tip for the featherlight jacket on bare arms is to leave the zip undone. The sleaves then fill with air avoiding skin contact and also applies a little pressure against rain ingress. I also reproof mine from time-to-time which helps a lot (tumble drying in between reproofs "reactivates" the proofer)
But yes - skin is the only cheap, waterproof and very breathable material - so MTFU
I use Grangers stuff. See here:http://www.grangers.co.uk/productview.cfm?id=1
And, yes, it maintains breathability (it's designed for Goretex, eVent etc). I use this stuff on all my outdoor gear (hillwalking etc) and I'm very happy with it.