I don't know if the sale is still going on but Office Depot had (http://www.microsoft.com/hardware/en...nema/H5D-00001) the Microsoft LifeCam for sale for 19.99 (original price 79.99). It is an in store deal only. I bought mine two days ago. If you are reading this call them and check if it's still on sale.

As far as the rest of the equipment, personally, I wouldn't be super concerned with it. You can podcast with anything really. You just have to make sure you have content that people are willing to listen to and want to hear. Your podcast can't sound like crap but you don't want to go out and buy the most expensive things just to have no one listen to you. I would say look to spend less than $100 on your set up. That includes a decent mic and a camera. Definitely check out USB mics on Amazon.