THere's no magic formula.
Personally, I do use a modeller (albeit a fairly expensive one), as I have found it the best overall way to get the variety of tones that I want/need. Tone is also important to me, surprisingly

I do play it through a power amp and guitar cabs (which are mic'ed), though, so in that way it's quite a traditional setup. I've also very happily used an amp plus pedals rig.
In all honesty, the punters don't give two hoots what guitar or amp you play, so long as it sounds generally OK, and you look like your enjoying yourself.
As for material, it's always going to be a mixture between what everyone in the band likes, as well as songs which the band generally think are a bit boring but the public tend to like. Unless it's your main income, though, I think one has to always keep in perspective that you are going to do this for fun, so everyone in the band needs to like the songs to a certain extent. I'd hate to go out and play whilst disliking a load of the songs I was playing. It wouldn't be fun anymore.
In my current band, if one member says they really don't like a particular song, then we simply don't do it. There are plenty of others to choose from, and we are all fairly flexible.
However, in the band before that, we had a hell of a time choosing songs because a couple of the members were very, very fussy over which songs they played, and had quite differing tastes. That was a problem.
For money, we don't out for under £200, but we're not looking for loads of gigs, so can pick and choose to a certain extent. We're also in the South of England so I guess prices are a little higher than up north a bit.