Microphone
Professional KJ's will likely use a mixing board for all their microphone and audio sweetening needs. However if you just want to use the computer as your mixer and sweetener, you can! (make sure you have a fast computer, the more audio processing your computer does, the slower it goes)
I went ahead and got a dual head wireless mic system. Try this or this. These are both VHF systems, tho I hear tell that UHF gives more professional results (more expensive, less interference), I've had good success with mine.
Here's an awesome cable, it's got XLR on one side and USB on the other, and it's pre-amped!! Wow!
If your microphone setup doesn't come with a pre-amp, you'll probably want a Griffin iMic, since it has a built-in pre-amp. You get much better sound and less hiss if you use a pre-amp. It is possible to use a microphone without a pre-amp, you can just plug the mic into your microphone port, but then you'll want to amp it in software, see below.
Depending on your microphone, you may need a special adapter.
Some day I plan to have kJams manage your microphone and audio effects, but for now I use Audio Hijack Pro, althogh you could just as easily use Audio Hijack (Lite) along with Line In (Direct Download), I like the extra features of the Pro version. If you're on a wicked tight budget you could just use Line In alone but then there's no software amp or effects.
In Audio Hijack, hijack the microphone port or the Line In application, and you should start getting sound from the mic. If you do NOT have a pre-amp on your mic, you will need to add the "V4X Effect -> Double Gain" to amp up the microphone signal a bit, tho you wil get some hiss, which you can then try to minimize with a Graphic EQ effect. At that point some KJ's like to add a reverb or chorus effect, to make the vocals sound a bit more like you're in a large theater.
If you also want to sweeten the audio of the music itself, you can at the same time hijack kJams, and add whatever effects you wish.
Keep in mind that digital audio processing (as opposed to using a mixing board) will always introduce a very slight delay in the audio.