I think it comes down to your budget and how much porting you intend to do.
You can do a lot with a Dremel tool, opening up lower transfers, exhaust and intake ports, and case matching cylinder bases. If you already have a Dremel you can invest about $12 in some carbide burs and start porting.
http://pages.ebay.com/link/?nav=item.view&alt=web&id=301583078096&globalID=EBAY-US
Some people use diamond cutoff wheels to get at the upper transfers. The Dremel right angle adapter is too big for these small cylinders. So if you want to monkey with port shape/timing on the transfers, your options all go up in price.
A foredom is like a more expensive Dremel, but gives you a torquier motor if you like grinding a lot out quickly, and foot pedal control. Foredom doesn't make a right angle adapter, that's where CC specialty tools come in. But they are expensive. If your pockets are deep enough they make a quality product for demanding grinding.
Dan Henry (DozerDan) uses old dental equipment, with a strong motor that connects to the drill via cables (pre flex-shaft technology) and he's done more port jobs than probably all the people in this thread combined. He says they work great: lots of torque and straight and right angle adapters are cheap. Finding the right bits for cheap is sometime a little hard though.
http://pages.ebay.com/link/?nav=item.view&alt=web&id=131575865619&globalID=EBAY-US
I've seen others get the electric dental tools, for the benefit of right angle adapters. If you're only doing porting for yourself it would probably be fine, but if you were trying to run a business service these might not last forever.
http://pages.ebay.com/link/?nav=item.view&alt=web&id=271478878664&globalID=EBAY-US
Some people have tried air tools with a right angle pencil grinder, and while they don't get as hot as the electric or shaft driven right angle tools they tend to lack torque. But you can pick them up for about $100 if you have an air compressor.
And then of course most of the guys that do this have access to a lathe so they can cut the base and/or cut squish or a popup piston for more compression. You could also cut the case with a mill like Mattyo instead of cutting the cylinder. But lathes and mills add a few thousand to the bill, instead of just a few hundred.
