2 stereo tracks is more than enough for just recording for yourself and what not. you dont need stereo in any of the tracks because nearly everything uses a mono 1/4 jack anyways...
just look at craigslist and pick up some stuff on there. i am constantly seeing some great portable Roland recording stations going for cheap. The easiest and cheapest way would be to buy a good quality M-Audio sound card for your computer and record that way... the sonic improvements of high end firewire boxes dont really become noticable unless you go all out and buy all the expensive gear.
as far as software goes, Pro Tools is used pretty often but i prefer Ableton Live. Great shit!
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