I'd say that anyone can use Reaper and Audacity... I'm a Linux guy so I also have Ardour at my disposal (as will Mac users).
Sound card - PODs won't need them, a lot of things are marketed just towards people who want a USB/Firewire/whatever connection between guitar and computer, and it's fine for convenience but I wouldn't recommend it too strongly for really good sounds unless you spend a ton of money. If you do get a new sound card, I'd recommend getting a 1010lt or an Audiophile 2496 (which I use myself - you will need a few phono adapters though, as it uses 'old-school' RCA plugs and not the TRS everywhere else). Note that you will also need a moderately good sounding amp, a decent microphone (Audix i5 or SM57 without the transformer), a good pre (home-built solid state with a decent schematic - pm if interested - or if you must pay, M-Audio DMP3, ART Tube MP), and a little patience to get things up and running well. I'm not going POD/digital modeling until digital starts doing something new (I fucking hate that modeling is all we're doing with such wonderful circuit designs, but that's a rant to be well-hidden on the Sneap forum somewhere) and I can safely say that my Crate XT120 -> transformerless SM57 -> ART Tube MP -> Audiophile 2496 chain gets the sound I want. Just for expandability I'd have to say that a good mic (if you haven't one already), mic pre (can't recommend my Tube MP strongly enough, and I also have nothing but praise for a certain DIY solid-state pre), and sound card (Audiophile 2496 kicks an ass and a half) would be the best route to go if you really want to get good sound after good sound with tweakability to fuck and back.
Jeff