i've seen sites with lower quality photos than the pics taken with those 5 megapixel megazoom cameras make it. on the other hand, it depends on niche, as well as your skill.
and yes, you need lights if you're shooting indoors. i mostly shoot video, so i use continuous lighting, but you can find some nice inexpensive strobe OR tungsten kits at
http://www.bhphotovideo.com/
and for the people who tell you it can't be done, i am shooting video with only $400 worth of lights, and a camcorder that run under a thousand, and the video looks better than almost any porn video i've ever seen.
my advice to anyone who's starting now - experiment. don't wait till you have a model in front of you to get out your new lights and camera!!!! light a chair, light the room, practice and then practice some more. i lit my fiance, my son, my cats - indoors, outdoors, in all conditions. by the time i did my first shoot, everything was controlled and the shoot looked great - even though i almost died of stage fright *LOL*