We do all our recording in my home studio. It started out with an 8 track 1/2 inch analog machine and now we use a computer based setup, Adobe Audition software, Athlon 64 3000+, 1GB ram, 3 10,000rpm SCSI hard drives, 80GB system, 80GB archive drive and a 200GB backup drive. I use a MOTU Firewire sound card, Groove Tubes Brick and ART Pro MP preamps, Groove Tubes Model 1B, SM 57, AKG C-3000, Peavey Condensers for overheads, Shure Beta 52 kick mic, the list goes on and on.
I would highly recommend using a computer based digital setup, I'm glad I went that route about 6 years ago with Cool Edit Pro. It works great, gets better all the time and it will allow you to produce professional quality results with the least amount of expense and work. Build the most powerful computer you can afford esspecially in the IO department and be prepared for a long challenging learning curve. Recording, mixing and producing your own material takes time but it's worth it, you will learn more about tone than you ever thought possible and have a lot of fun in the process.
I've also got an extensive collection of guitar and bass amps and other gear that we use. I've collected that stuff over the last 10 or 15 years so that's a big help.
Recording cinematiclly is how we do it, one part at a time. On our latest project I rented a big house in our town for a weekend of drum recording. It sounds fantastic. I did this because in the past the limitations of our recording space hurt the drum sounds on record to some degree. Now we just tracked all the tunes onto the 1/2 inch 8 track and I transfered them into the computer for overdubing.
I firmly believe that once the drums are done getting an effective guitar, vocal and bass sound isn't nearly as tough environment wise if you know what you are doing.
I've spent hundreds of hours micing guitar cabinets and trying different things, combinations of gear and finding what seems to work best for a given track or situation, it's fun and sometimes frustrating and lots of work but it's also what seperates the men from the boys when it comes to making a record.
Most importantly have fun good gear gets cheaper all the time so I would try to get a few good mics, mic pre or good quality mixer and sound card FIRST. Experiment and find some sounds, our first project was a bunch of cover tunes and we had an awesome time cutting the tracks. Again due to the lack of isolation, number of tracks and other practical considerations, I had to record the drums first with a scratch track and then mix them down to two tracks on the 8 track, then by overdubbing all the other parts, we did the entire project in my apartment, recorded, mixed and everything.
Needless to say, much was learned but since they were tunes we all knew really well it was pretty easy. And by doing a cover or two you have a target to shoot for, you can imitate the production on the record with your own sounds and that's extremely educational and fun.