CAT5 cable can be purchased at many electronic's stores (Fry's, Compusa, hell even Radio Shack had some last time I was there) If you need to do any running of cable through walls, then you'll need to purchase the wire with no ends, a crimper and some RJ45 connectors (they're like big phone line connectors.)
This is a good wiring reference.
A router is not the same as a hub, though it can have a hub or switch built in. The routers you would be interested in allow you to connect your computers to the router, and then connect the router to the cable modem. You will only be charged for on IP, and you can use many computers at one time (254 max on the Linksys and I think the Netgear, 253 on the SMC because one spot is reserved for the print server.) An alternative to one of these routers is a computer with two network cards, one plugged into the cable modem, and one connecting to the other computer, or hub. You would then install and setup Internet Connection Sharing which comes with Win98SE, and ME. Or the equivalent on Win2k (never tried it on 2k)
As for the cable company saying your computers are too far apart, how far is this? You should be able to run CAT5 up to 100 metres from hub to PC.
My recommmendation is to invest in a hardware router, check the Hot Deals forum, one of them are always on sale. Having used the Linksys, Netgear, and SMC routers, I can say all three work great. Then run yourself a line downstairs. Give yourself a weekend to do it all, especially if you run the cable through the wall.