recording guitar and vocals

i have used in the past the basic recording programme on windows xp and a decent mic to record and i got pretty good results.
i want too take that a step further now and record good result not pretty good.
how do i go about it ? ?
things i need ?
setting on audacity ?
do i need to connect my guitar to the laptop ?
if i do need too connect guitar to laptop how do i then record my vocals at same time ?
many thanks daniel

all links and replies v much appreciated.