I'm going to go ahead and suggest something. JC... I took a look at your profile, and I'm going to make a couple of assumptions here. I'm going to guess that everyone in the band is pre-college age, and that your budget is pretty limited.
With those two things in consideration (as well as the newness to the recording process) you may want to consider getting an all in one unit, like the Zoom R16 or the Boss BR1600 (I actually own one of the Boss units) both are portable, have a complete suite of effects, etc.; and can be bought for under $500 (the Zoom you can get for $399 new, and I picked up my Boss used for $500, but they run $1500 new). The Zoom will even work as an interface and controller for a PC and comes with Cubase LE DAW software.
Neither of these units will give you an industry standard CD, but they make great demos (either of these are capable of 8 tracks of simultaneous recording which would allow you to mic up a full set of drums), and would get you started in the world of recording.
If you could score one of these units, a good budget minded condenser like an AKG Perception 220, a few SM 57's, and an inexpensive drum miking kit you could get started for somewhere in the neighborhood of $1000 and have a setup that would serve you well for recording demos and new songs you write, as well as live performances for a good while.
If you want to try and build a computer based home studio you'll sink well more than that into equipment if you want "good" stuff.
If you're wondering what the Boss and Zoom units are capable of check out the two links below. The first is a guy on homerecording forums that records all his stuff via the BR1600, the second a is a gearwire review of the Zoom R16 complete with recordings:
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*The music may not be your cup of tea from a taste standpoint, they're only meant to demonstrate recording quality. I would suggest popping on some headphones and take a listen, but especially the Zoom demo... that's a really good illustration of how you can use these things.