most routers nowadays have a firewall already built-in. you might want to look into that first.
if you do decide to go with the PC Firewall route, here's what i had in a nutshell.
You basically need a PC with 2 network cards and a software firewall/router
An AMD K5-233 w/ 128Megs of RAM
2 NIC's (one to cable modem, the other to LAN)
Win2k
WinRoute PRO (software firewall)
1.6G HDD, CD-ROM, floppy.
no keyboard, monitor or mouse..(not really needed once you get up and running)
The box was complete overkill for the task. A P-133 with 32Megs of RAM would have been overkill.
WinRoute also can be configured to do DHCP and DNS Forwarding for your LAN computers, though I had a different box doing those on my LAN.
There are tons of firewall software out there, many of them free.