Hi,
it depends on your power supply filtering, but usually using a linear power supply is better and you can achieve better results. Normally in microcontrollers there is no internal ripple or switching noise rejection, (because it needs large capacitors or inductors (in Chip Scale)) , and usually they have an extra power pin for adc , so you can use external power supply filtering or even use a very precise reference regulator.
According to ATMEGA32 (i don't have ATMEGA16 datasheet at the moment), it has 3 adc/vcc related pins :
VCC : microcontroller power supply
AVCC : PortD+ A/D Power
Aref : A/D reference Voltage
According to datasheet : you should connect your AVCC to VCC Pin with a low pass filter.
You should connect a capacitor between AREF and GND.(Near Aref Pin)
you can use Aref (internal 2.56V) or AVCC as ADC reference in your program. You may use ADC in noise canceler mode (depends on your program) which halts the main core during the ADC sampling to eliminates negative effects of internal clocks on ADC Sample.