Well, I'd say you need a microphone since you want to record vocals. In order to make the microphen sound good you need a pre-amp. Third, to get the sound from the microphone to your computer you need a soundcard.
The M-Audio Duo is an external device wich acts both as mic pre-amp and audio connector to your computer (i.e. soundcard). It gives very good soundquality and is pretty cheap. I've been using it for a while to record vocals and guitars and I think it's very easy to use - I've gotten professional jobs as well as semi-professional out of the music I've produce with the M-Audio Duo.
If you want record really good vocals I suggest that you buy a Shure mike, the SM8 perhaps, (well respected microphone brand) and an M-Audio Duo since it has built in mic preamps.
The price for a this would be aproximatly $380.
If you have the Producer edition of Fruity Loops 4 then you could record your vocals in Fruity (I haven't tried that though).
If you want to spend the rest of your money then I would get a midi keyboard and a midi-interface (or a keyboard with built in mid interface - just plug it in the USB-port) so you can play software synths and sampled sounds from it. Or get some nice headphones and a mic stand.
You would probably want a sequencer like Cubase or Logic eventually but I think you could do almost everything in Fruity Loops in the beginning. But then you need - Fruity Loops Studio Producer Edition - only that version enables audiorecording.
There are other solutions but mine is effective yet cheap (I know it's possible to record music with a Sound Blaster as well, but you seem to have a good budget).
Hope this helps,
Giannis