The built in mic is of the same type used in cell phones. So, yes, if you record music with it, it will be like listening to music over a phone. Not the best quality.
What you need is a better mic. However once you go down that route it's easy to buy a studio full for recording equipment and spend 10 grand. Assuming you are on a tight budget and looking for less then $100. The nest step up after the internal mic is a "USB Mic." that is one that you plug into the USB port. You migt need a mic stand too. Not only would this be a better mic, but being on a cable yu can place it close to the source.
The other option is to use a digital hand held recorder. Price is $150 to $200 and these rcord to SD memory cards, the kind used in cameras, then later to use an SD card reader to copy the files. Quality is like the USB mic.
You can do nearly pro quiality recording at home but first you need a good room, some mics and a ralistic beginner's budget is closer to $500.
You are looking at something like one of these. The AT2020 shown , kind of need a better stand. Mic position is very important, you will want to get it very close, as in inches, not feet.
http://www.amazon.com/Audio-Technica-AT2020-USB-Condenser-Microphone/dp/B001AS6OYC