I manage and use several types of computer/audio systems, so here's my opinion:
To start with your group, I would recommend starting small, with a relatively inexpensive audio interface, like something from m-audio or Edirol. That way, if you don't like it or would rather not do it, you haven't lost out on much.
However, if you really want to jump right in to it, you can spend a lot of money and make it really great really fast. If you're just going to be doing band recordings, (editing, mixing, effects, etc.) then you could try Digidesign's Pro Tools. Despite the company's "dictatorship" in terms of having to use their software with ONLY their hardware, their products are easy to use and offer a lot of options. Their base system, the mbox, is a two-channel USB interface and the software will let you run up to 32 tracks of audio. It's around $500. The next step up is the 002, and the rack version (002R) offers eight channel analog in and up to 32 tracks. It's around $1200.
The mbox is a great little device, but limited in terms of capacity. Only two tracks at a time makes for a very slow process, especially with percussion.
The 002R is a good step up, letting you record eight tracks at once, but only four of the eight channels have mic preamps, so you would need to find another four channel preamp to round it out if you wanted to record eight instruments simultaneously.
The other hardware company I would recommend (if you're going to be serious about this) is Mark of the Unicorn (MOTU). They make great FireWire interfaces. The 828 is an eight in/eight out box, but it only has two mic preamps, requiring an additional purchase of a preamp. It's about $800. Their 896 interface gives eight in/eight out and each channel has a preamp. A very good deal, if you ask me. The price is around $1200 for this one, but it has significant advantages over the 002R (eight mic preamps, higher sampling rates, and a CueMIX DSP function that lets you mix on it without a computer for live gigging).
The only downside to MOTU is the software. Their stuff comes with AudioDesk, which is identical to the recording/mixing portion of their retail software, Digital Performer. AudioDesk is great and will be good for recording your band, but if you want to do MIDI work for other instruments or any software instruments, it won't do it.
Then it comes down to software on top of any of this hardware. Pro Tools is very much a standard in studios everywhere, making your work very portable. But as computers are gaining speed, that standard is breaking away a little and people are looking at more inexpensive options. Logic is making its way up as is Digital Performer. These programs are used with film and other forms of media. My opportunity to use Logic was shot down very early because I got it in a very early version and didn't like it, I've never tried it since. But in recent years I hear it has gotten better, but I'm already focused on the Digital Performer/Pro Tools combination.
What I would recommend is that you find a store that demos these products and then check them out. Ask questions, do research. It is a big investment. The other things you will need are microphones, possibly more preamps (depending on what you decide with hardware), cables, speakers and/or headphones, and storage. Your internal drive will not be capable of running big sessions, so a FireWire drive is definitely needed.
By the way, there was another big long forum about this a while ago... do a little searching to find it. It addressed a lot of your upcoming concerns.
Good luck,
cpjakes