First of all, I would recommend some sort of extension cord that will run from the mic jack of your sound card (that is, a male to female 1/4" patch cord) to save the input socket on your sound card. This'll also make it much more convenient for you, since the plug will run out to the front of the computer.

I would recommend at least trying to record with a microphone - you might be surprised at the quality. I would imagine that this would also be better for your sound card...i dunno.

What program do you use for mixing? I'm currently using a demo version of Acid Pro 2.0, which is pretty good, except it limits me to 8 tracks.