I started so very long ago with a Mac clone, running Logic Audio Discovery 1.0 (w/ the audiowerk8 soundcard). I had a consumer stereo system, 2 4 channel radio shack brand passive mixers for monitoring and input. I used a Samson S11 mic running through a Zoom505 guitar effects pedal. Lastly, the heart of my studio was my beloved and now well worn Alesis QS6 synth.
I do not know how I wrote ANYTHING on that setup, much less master it in a semi acceptable manner. I later bought some outboard effects processors mainly for vocals and post production. I got a Mackie 1202VLZ mixer, which helped a lot. That gave me 4 channels for the mic, VCR (for soundbytes) 2 for the Alesis and 8 for the audiowerk8 outputs. Plus Mackie's handy alt 3-4 feature to feed channels selectively back into the computer. Also I upgraded to Event 20|20bias monitors, which helped a lot.
I used that 2nd setup for another few years and it worked rather well. In 2002, I got a shiny new PowerMac G4 and Logic Platinum 4.0. Most of the built in effects made my older outboard gear obsolete. The audiowerk8 card still helped somewhat with the load on the processor. I wrote music for a number of years. Most of which came out pretty well.
I was in the army when I did my next studio upgrade. I had some deployment cash as well as having no real bills at the time... so I wandered over to the local Session music store and got a Mackie 1220 Onyx (+ firewire card) then proceeded to buy a MacPro 2.66ghz with 4gigs of ram and Logic 7. Logic 6 and 7 both included all the software synths you used to have to buy separately. I found myself using those more and more. My QS6 and my Supernova 2 started collecting dust.
After my 2nd deployment, I picked up some Mackie 824mk2 monitors. Those things greeted me with a giant face full of clarity about what was wrong with my mixes. Good monitors are a godsend. I also bumped up to Logic Pro 8/Studio which have pretty much anything you'd need to get started included in the box. I bought a AT2050 mic, which also makes much prettier recordings than my old dynamic mic.
I found out I was going to spend my last year and change in the army in Korea. So I grabbed a Apr 2010 model MacBookPro 2.66ghz with 8gigs of ram. It's possibly slightly better than my desktop. I had to leave most of my studio in Seattle. But with just my laptop, korg nanoKEY (for diddling out melodies) and my crusty old Sony 7509 headphones. I'm able to work on remastering and revamping some of my older songs, I didn't bring a mic do to barracks living... so no new vocals while I'm here.
**The moral of the story is**
If you pick up a good laptop (2+ghz 4+GB ram 7200rpm HD) and a software package like Logic or Sonar? (help me out there PC peeps). Some type of usb keyboard/controller, a usb or firewire audio (and or midi) I/O device, a decent (pro) microphone and some decent studio monitors (minimum 6" woofer). You could build a decent project studio that would fit on a coffee table for 1000-5000 dollars.
M-Audio is a good place to get ideas: M-Audio
Also, swing by a local Guitar Center or other music store where you can spend a few hours fiddling with software, mixers, controllers, monitors, etc. Even Best Buy is trying to get into the home studio market in some stores. Their selection is more low end consumer stuff though. All depends on what you can afford.
Or you can get something like FL Studio (PC), Garageband or Logic Express (Mac) and poof, you're a band. Don't do that though, people point and laugh. *No offense intended
* towards the people who actually use those programs to their fullest extent and make good music.