For recording I use Sonar Home Studio 7. I think I paid around $100 for the basic program, but there are expansion packs you can buy. Sonar 8 is already out though, so I'm a little behind the times. It works though. If you're using a Mac I hear that "Logic" is the way to go. It's a bit pricey, but awesome. I think most Macs come with a program called "Garage Band" though, that allows you to record and edit music.
Here's some stuff that I've recorded using what I have.