heh... before Dr. Simon answers I'll butt in and answer for the computer software geeks among us. (no offence to Simon, but tabletop recorders are no match for computer software in my humble groovy opinion)
If you want to save a whole lot of money you can get by with a relatively cheap mic, some free recording software and a couple of shareware VSTi instruments.
You might also want to grab some freebie or shareware compressors and reverbs.

This song I did a coupla years ago...:

http://s93744050.onlinehome.us/mp3/GoodNight.F.mp3

... and was done using a really cheap Aria mic worth about $50, a really cheap acoustic I got for $45 from a pawn shop and mostly free equipment from online.
The instruments are all VSTi's instruments from inside the computer and the software was Cubase which is where a lot of the free instruments came from. (in your case, rather than spending money on Cubase I'd suggest trying a free program called "ProTools Free"

http://www.digidesign.com/ptfree/

... which will give you 8 tracks of audio and loads of midi channels, then use Google to search for some free synths and plug-ins for it.

An outboard mixer, although not necessary, would allow you to adjust the volume of your mic input (I used a Behringer Eurorack 802A tabletop 8 channel mixer)

Total cost of the above stuff is just a few hundred bucks, including the mixer, mic and guitar. Total time to record is about 3 hours.

The biggest advantage of recording using computer based software is the ability to edit. For instance moving verses and chorus's around with the click of a button by just dragging and pasting.... or using stuff like autotune to help vocals. (ie, the very last word on this tune... 'good'-night... was moved up a half step using autotune cause she sang the wrong note. and the whole vocal is edited together almost word for word from about 12 takes she did with several lines shifted back and forth to make them sound like they're more in beat)
The vocalist also did them in California over the internet in her kitchen using her own computer then sent them to me by email to Canada.
Another advantage to software based recording is harmonies. I used a separate arrange window to lay down a 16 part harmony and then reduce it down to stereo with autotune for the background.... total time to do all the harmonies was about 20 minutes.

A workaround for the 8 track limit in ProTools free btw if you want to do the same type of thing: is to export the 8 tracks as a stereo .wav file, (your instrumental bed tracks for instance) and then import them as a stereo mix, leaving 6 more tracks open for vocals or other overdubs.

If any of this stuff is confusing, I've got tons of step by step multitrack tutorials on my web page taking you through the whole process.