I've been really pushing the advantages of starting out in home recording by "using the pc recording studio you already have." By that I mean that it is now possible to produce multi-track audio with just a normal PC, its on-board sound card, and even the cheapest of plastic PC microphones.
All you have to do is download the open source (read: "free") audio program called Audacity and you've got what you need to get started. Most folks won't have to spend a dime to get to this level. Those who don't have a microphone can get one for about $5.00 anywhere they sell computer stuff (office supply stores, Tar-jay, Wall-Market, etc.).
To learn how to do all this step-by-step, and make your first recording in the next hour, see our tutorials (the 1st 8 videos are free) here.
Lots of folks will, with a little knowledge, be able to produce what they need with JUST the stuff I mentioned. Maybe you're just looking to put together a video tutorial or record a podcast, voice-over, etc. There are obviously some limitations to production capability with the $5.00 (or less) home recording studio, however. Here are some of the biggies.
Audacity cannot record MIDI. You can open MIDI files in Audacity's current BETA version. But you can't record it. If you work with MIDI, that will be a serious limitation.
Audacity does not support VSTi. Virtual instruments are wonderful, and can allow you to play trumpet, drums, piano, violin, etc. from a keyboard. Many of them sound indistinguishable from the real thing! But alas, the most common instrument plugin formats, VSTi and DXi are not supported.
You won't be able to record multiple tracks at one time. This is mostly a limitation of the sound card in the $5.00 studio, which is your basic single channel card. Even if you have a multi-channel piece of hardware, the only way it will work with Audacity is for it to have a single Windows (no support for ASIO) "WDM" drive for multi-channel. Good luck finding one of those. Otherwise, you just have to over-dub each track.
There are, of course, more limitations at this level. But I think those are the biggest. If you want to do any of the above things, you'll have to venture into the world of "software you gotta pay for." The good news there are numerous programs out there for under $100, or even under $50, that will do nicely. Details on those in another article.