The cheapest and best thing to use is a mac with iMovie but the greatest thing to use is final cut express or pro but its expensive express is around 150 and pro 1G!
If you don't have a mac though a good software to use is sony vegas.
I'm only on work experience but making videos for youtube gives you some idea of things
oh and if looking for a good camera a good one to start with is a Flip HD as they are cheap for what they are and have a USB on them that charges it also.