This CNET article provides a good basic overview of how to create and distribute podcasts.
Amber and I use an Olympus DS-2 digital recorder for field interviews, and a M-Audio Nova condenser mic plugged into a M-Audio MobilePre USB Mobile preamp for "studio" segments. (The studio is actually my apartment.) What's neat about the MobilePre is it's powered by USB, so it's very portable. The setting is much less important than the equipment, as a good condenser mic will be forgiving with background noise.