In the "home vs studio" recording debate, I would echo Berith's comments and say that studios will get the better quality 9 times out of 10.
Having worked in a semi-professional local school studio with pretty decent gear - Behringer digital desk, Mackie analogue desk, Rode NT1 condensers, Shure SM57 & SM58s, Mac G5 running Logic Pro 7
[ more info ] - you would be hard-pushed to get the same quality in a home setup, mainly because home setups use amp emulators (PODs, effects boards etc) to create an amp sound while being plugged direct into the PC and although amp emulators are getting better and some people may swear by them, I would always go for an old-school close-mic'd amp because the sound you get from mic'ing it properly (i.e. one close dynamic, one far condenser, mixed slightly stereo) is just miles better to my ears.
Vocals using an SM58 or similar will sound good in a live setup, but the mics just don't have the quality to capture the frequency ranges of higher-quality condensers (Neumanns, Rodes, ATs, AKGs), same applies for pretty much every single piece of kit in a studio. It may be expensive gear, but you get what you pay for most of the time.
Also, without decent mixing and mastering software, you're pretty limited. A lot of the free stuff is pretty crap compared to stuff like Logic and ProTools (if you don't run Linux, which the majority of people don't) - you don't get the quality compressors, limiters, noise gates, EQs, reverb, chorus and other effects processors that the nice expensive programs give you.
[/ my 2p worth]