One big advantage of something like the E-MU 0404 USB 2.0 Audio/MIDI Interface, suggested above, is the software that usually comes bundled with it. It all depends exactly what they bundle, but often there will be some sort of multi-track recording software (cakewalk in this case ?), a mastering (wave-editing) program and CD-burning software.
If you have no musical software so far, it might to be wise to look at a few USB audio interfaces and see what software comes bundled with each.
For example, I'm sure you'll want the ability to add "Virtual" drums, bass and maybe keys to many guitar recordings you make. Something like Cubase (Cubase SE - about £82) comes with virtual bass, drums and all sorts of other instruments (these are all called VST instruments).
My problem is that I am so out of touch with what's "out there" at the moment. It's such a fast moving market. Personally, I've focussed on quality PCI soundcard-based recording, so I'm really pretty unaware of all the various types of outboard interface boxes out there.
However, what is common to all systems is the need for quality speakers (near field monitors). I would recommend saving a reasonable part of your budget for them. Headphones (even good ones) are just not the same. I could not believe what I'd been missing when I got my monitors. I had been using h'phones and good computer speakers, but it made mixing sooooooo much easier when I got the monitors.
The blokes at Digital Village (St.Mary's street, Soton) are generally VERY good people to talk to about what's on the market at the moment. They can access a huge range of stock and are as cheap as anyone. They also have a lot of PC's up and running with a lot of the software loaded up on them.
If you picked up some monitors secondhand and then got some professional advice from them about what was best for your needs, you wouldn't go far wrong.
BTW Rich, what are you doing up at 4.47am ???
Alan