A few years ago making music at home cost thousands of pounds in equipment to build your small home studio, it usually took up a room as well, I know I spent thousands on tape recorders, mixers, synthesisers and drum machines!
Today you can simulate all of this equipment on an average PC and turn it into a recording studio, you can connect usb microphones and keyboards to record your singing and playing and edit and add effects to your hearts content and all at a quality that could only have been dreamed of a few years ago.
Some people still like the physical actions and the sound of real instruments though so with a sound card or interface you can plug in you guitar or vintage equipment and have the best of both worlds. I am still a fan of real analog synthesisers so the PAiA 9700 synthesiser is ideal, you still have the hands on control with knobs and patch cords and the real analog sound but with the ability to record and edit the audio on your PC. Take a look at the products page for the PAiA.