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Hay Cosmic, you might wanna look into "Versitile Recording" version 6.0 which you can get at Guitar Center for under 100 bucks. 32bit Internal Mixing and advanced format support.
Personally I am monetarily handicapped, so what I use is this old cassette player with a built in mic. The sound isn't that great and there is plenty of hiss but it gets the job done.
I've been rcording professionally for quite some time now, and having used all of the latest studio recording software, i always come back to SONAR 4 Producer Edition. It's a very user friendly program with all of the features you could possibly want. it's a bit expensive but if you get back at me i can give you a hacked version that is fully operational, the one i use at home.
A good option for acustic guitar recording is the "Maverick" acoustic pickup. Less than 30bucks at Guitar Center. Better quality would be the "Dean Markley" or "Fishman" pickups. More $ but less feedback potential.