Perhaps the most important element in your signal chain, the Mic is what captures the audio that will eventually end up in your computer. Here are some really inexpensive options. I haven't done much research here, so I can't really help you out.

• Shure SM57 / SM58
  Every band in america will recognize the SM58 on sight. The workhorse of the audio world, this microphone is in more places, and withstands more abuse than any other microphone. The SM57 is almost the same microphone, but without the heavy-duty metal mesh surrounding the element, so it sounds a little better, but withstands abuse a little worse. $70.
• Marshall MXL 603 / MXL 2001
  These have been brought to my attention as good bang-for-your-buck mic's time and again in audio groups. Offered as a $180 combo pack, this is a great intro to large-diaphragm condenser microphones.
• Berhinger ECM-8000
  Sold as a test mic, this omni-directional condenser mic will accurately reproduce whatever's fed into it. Plus, being omni-directional rather than cardiod, it doesn't suffer from the proximity-effect (where as you get closer to the mic, it gets boomier) allowing you to really close mic an amp. These should be good foor room-micing as well, but less good on vocal or acoustic instruments as they'll pick up every little noise in the room as well. $40.
• Rode NT1
  After the MXL 603, this is the most mic most recommended as as an inexpensive large diaphram mic. $200

Update January 30, 2003: Found this interesting microphone comparison. You can download .wav files of various mic's used to record an acoustic guitar.

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