1. Only kit I ever bought was a 10 gallon kit from wal-mart. I think it was around $30 and came with tank, heater, filter, incandescent light hood hmm probably some other little things I forgot now. They are a decent starter kit and not as expensive as some of the mini-bow and eclipse kits which are smaller. You can also get a 10 gallon tank alone for around $9 then purchase the heater, filter and lighting separately. Will cost a bit more this way, but you'll have better quality parts also. If you decide to buy everything separately, you can post for recommendations on equipment you'll need to get started. You'll be much happier with a 10 gallon than you will with anything smaller.
2. You use tap water that is treated with dechlorinator. Some water supplies use chlorine and some use chloramines. If you'll chose a dechlorinator that removes both, then you don't have to worry about what your water supply is using and you're covered even if they decide to change it at some point.
3. Live plants aren't necessary. Most people start out with fake plants then once they get hooked on keeping fish start wanting live plants. I'd probably stick with fake plants for now and do some research on live plants if it's something you want to do later.
4. Plants (fake or live) are for decoration and also hiding places for the fish. Live plants do provide some other benefits to your tank besides just looking more natural (they consume ammonia and nitrates), but again they aren't necessary for a sucessful aquarium.
5. That is a personal preference really. Many people who go with the bright colored gravel starting out later decide that they prefer something more natural and end up changing it. I personally like a more natural look. Most of that colored gravel has been painted and the paint chips off over time and you'll end up with flakes of paint all over. My favorite cheap substrate is pool filter sand, it's not really small sand and it's a mixture of browns and it's natural (no paint). You can get it at a pool store and also many LFS' (local fish store) carry it.
I'd also highly recommend that you read up on fishless cycling. It means you'll have to look at a fishless tank for up to 6 weeks or so, but once the cycle is completed then you can add all the fish you plan to keep on the same day. You can take this 6 weeks to research what fish you want and will be compatible with each other and your size tank. Saves you a lot of headaches.
Putting fish into an uncycled tank is a gamble, the ammonia and nitrite spikes could make them sick or even kill them (not good with kids especially). You also need to do water changes more often (sometimes daily depending on how many fish you put in) to keep the ammonia and nitrite down until the cycle is complete causing you a lot more work.
You're doing a great thing by coming here before you buy and not just jumping into this. Hopefully doing a bit of research ahead of time will save you a lot of extra work and frustration. Best of luck to ya
