C182 Instructor reports airborne conflict with a skydiver while giving G1000 instruction and troubleshooting an auto pilot failure.

Narrative

G1000 flight instruction was being given to a G1000 Student by an authorized Flight Instructor. While on climbout to begin a VFR cross-country flight at 4;500 FT MSL; a complete autopilot failure was experienced. While the Instructor was looking at the autopilot trying to determine how to resolve the problem; at approximately 3;500 FT MSL; the Student looked outside and saw a parachutist at a distance of approximately 2;500 FT and immediately turned away to avoid the area. See and avoid was accomplished. The G1000 Student came to the Instructor's home base from out of the area and called FSS for a Standard Briefing; including NOTAM's and TFR's. The FSS Briefer did not reveal any parachuting along the route. G1000 training seems to require too much 'heads-down' time; pushing buttons and changing settings as compared to 'round-dial' flight training. Perhaps the G1000 would be better suited to two-pilot operations. This situation involved a climb which limited forward visibility; an autopilot failure which caused a distraction; and an Instructor with his attention diverted to the autopilot. Lessons were learned.