Don't know if people already use this but I've only just found out about it. It's called GXSCC and is a free program that takes in MIDI files and plays them in an 8 bit style.
You can get the program from here http://www.geocities.co.jp/SiliconValley-SanJose/8700/P/GsorigE.htm
If you need MIDIs then try http://www.vgmusic.com/ which has plenty to use. Of course you can't use these in commercial games, you'll need permission for that, but there are people out there offering free music to use, just search about.
Here's a vid of some output from it. http://www.youtube.com/watch?v=5ekPMRZE5n4
Hope this is of some use to anyone :)