You don't say how quickly you need to track the line, or what the background is.
If it were me, and I knew what the background was going to look like, I'd go with a CCD camera and an onboard DSP. Simple DOG or Laplacian of Gaussian filters should give you a nice, clean edge to follow after you spend a little time exploring parameter space to filter out whatever the background is.
Then it's just a matter of designing the algorithm to rotate left or right to keep the edge pointed north. Of course, everyone has their personal preferences. To me, this seems the easiest and most robust.