Best way to create a regulated 1.95V?
It's not necessary to provide the VDDCORE voltage externally. VDDOUT can provide the typical 1.8VDC for the core, so you can just connect this to VDDCORE and VDDPLL with external decoupling caps (described in section 5.3).

Section 5, and specifically 5.3 provides the info you're looking for:


  VDDCORE pins. They power the logic of the device; voltage ranges from 1.65V to 1.95V, 1.8V typical. It can be
  connected to the VDDOUT pin with decoupling capacitor. VDDCORE is required for the device, including its
  embedded Flash, to operate correctly.
  
  Voltage Regulator
  The SAM7X512/256/128 embeds a voltage regulator that is managed by the System Controller.
  In Normal Mode, the voltage regulator consumes less than 100 μA static current and draws 100 mA of output current.
  The voltage regulator also has a Low-power Mode. In this mode, it consumes less than 25 μA static current and draws 1
  mA of output current.
  Adequate output supply decoupling is mandatory for VDDOUT to reduce ripple and avoid oscillations. The best way to
  achieve this is to use two capacitors in parallel: one external 470 pF (or 1 nF) NPO capacitor should be connected
  between VDDOUT and GND as close to the chip as possible. One external 2.2 μF (or 3.3 μF) X7R capacitor should be
  connected between VDDOUT and GND.
  Adequate input supply decoupling is mandatory for VDDIN in order to improve startup stability and reduce source voltage
  drop. The input decoupling capacitor should be placed close to the chip. For example, two capacitors can be used in
  parallel: 100 nF NPO and 4.7 μF X7R


And Section 5.4 shows a typical powering scheme.