Until you upgrade to 512 MB of ram, you will always deal with sluggish performance. Crucial.com seems to be highly recommended by others.
As for getting audio into your mini, your only options are either USB or FireWire audio interfaces.
A very inexpensive way is to get a Griffin iMic USB Audio Interface. It is about $35. This would be good for basic work, but not serious recording (the quality will not be up to recording-studio quality by any means):
http://store.apple.com/1-800-MY-APP...ction/reenterStore?productLearnMore=T3041LL/A
A more professional option is a Mark of the Unicorn Firewire based interface, such as the 828 Mark II:
http://www.motu.com/products/motuaudio/828/body.html/en
This unit is for serious recording with a high quality signal. It costs about $750 new. I would look for one on ebay if I were shopping. I just went there and found someone selling three for $719 each:
http://cgi.ebay.com/ws/eBayISAPI.dll?ViewItem&category=41784&item=7308074435&rd=1&ssPageName=WDVW
The question is: how serious are you about it? If serious, save up for the 828 while buying the iMic for getting used to GarageBand and for getting musical ideas down. Also, if you are serious, the $$$$ will have to keep flowing from your wallet to the sellers. You will need a good mic, a good pre-amp (minimum $500 for a good one), a good audio program (Logic or Digital Performer or Pro Tools), and some musical talent in order to take it to the next level (or extreme luck or persistance).
Feel free to ask any other questions. Keep in mind that for serious audio work, the Mac Mini is going to ultimately disappoint. As you get more and more serious, the Mini's shortcomings will become obvious. Playing back several audio tracks, midi tracks, effects plug-ins, and software synths will surely bog the Mini down. When you get more into it, you will want to upgrade to a tower-based Mac, like a dual processor G5. For beginning in audio with GarageBand, the Mini will be just fine.