I haven't really used the input capture feature on the mega168, but the mega168 datasheet could probably help you figure out what it can do and how to use it. I typically use pin change interrupts to capture RC signal pulses. You can find an example of using pin change interrupts in this thread (the top post on the second page, written by me):
Whenever a pin change event occurs, I would set a variable equal to the current count of a running timer. If you're careful about timer overflows, you can use this technique to figure out how much time has elapsed between pin changes, and you can in turn use this to figure out how long the signal spends high and how long it spends low.