For software, you can use Buzz. It's free, and is extremely powerful. Probably a higher learning curve than Reason or FL, but also probably more powerful. http://www.buzzmachines.com
I would recommend two pieces of hardware, minimum -- a decent soundcard, and a good set of studio monitors. The M-Audio Audiophile 2496 will be your best bet for a soundcard (it is an excellent price, and it will last you a LONG time, if not forever). M-Audio Studiophile SP-5B monitors will, I think, be your best value for monitors. They will cost at least $255 (I got them for that off eBay). Anything less than that probably isn't going to be worth it...
Oh, you will also have to shell out $20 - $50 for cables.
And you may want to get a keyboard like the Evolution MK-149 or something. Unless you are well enough versed musically that you can hear any chord you want to play in your head...
I just went through this myself. 
The electribe looks like a pretty good piece of hardware. I'll be picking up an EA or EM soon, as my first hardware synth. Then likely saving up for an Access Virus B (or C), then I dunno.
Good luck...
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-brash
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