First of all, you will need a decent full-duplex sound card with ASIO driver support. The options here are virtually unlimited. It all depends on your requirements and budget. Personally, I would make sure to invest at least about $100 to $150 into the hardware, which would already buy you a sound interface that is fit for semi-professional home recording purposes. However, you'll definitely find less expensive sound hardware that might meet your current requirements just fine. There are plenty of resources (both print magazines and online) where you will find sound card reviews and comparisons on a regular basis. If you have a laptop or some other kind of system that is relatively limited in its expandability (e.g. an iMac), you will have to opt for an external audio interface that connects to the machine via USB or Firewire. These are generally slightly more expensive than their PCI plug-in card counterparts (given comparable specifications).
Obviously, you'll also need a decent microphone that connects to your new sound card. Choosing and setting up the right mic is a science in its own right within audio engineering. There is a little workshop on microphoning that you can find here on Magix.info in the "Online Training" section:
I recommend one of two interfaces depending on whether you will use USB or Firewire. I've had some latency issues with USB (even 2.0) so I strongly recommend Firewire. Both of these solutions are affordable and I've used both so I can recommend highly and they work well with Magix products (and others).
First, the USB interface. I suggest the Tascam US-122. It's a great interface with all the connection options you need as well as phantom power for your mics. The controls are right on the surface of the interface and it even has direct hardware monitoring. This is THE solution if you just want to plug your mics and instruments in and record.
Second is the Firewire interface. I suggest the Behringer FCA202. It's a simple, easy to use Firewire box. It only has instrument cable inputs on it so you would require and adapter or preamp for your mics. I use a mixing board and then plug directly into the inputs of the FCA202. Now I have all kinds of mic and line level inputs for recording. Enough to handle an entire band.
I will say this in closing, while both interfaces sound good on the recorded audio; the Behringer sounds MUCH better than the Tascam.
Never use a standard PC sound card.