Not sure what kind of cash you're ready to throw at recording but a friend of mine uses an M-Audio Mobile preamp which simply plugs into a USB port on his computer. He hooks his condenser mic to the pre and uses that to record and I'm not sure why he does that with his electric guitar since you can plug directly into the preamp but the acoustic I understand.

His preamp can be seen here and the mic he uses is here .

There is no soundcard upgrade needed as the pre does that work and his recordings sound pretty good. It comes bundled with software but he uses audacity with it. When I start playing stuff thats worth recording then I'll buy a similar setup.