I'll second Debbie's (Stoller I think) Stitch 'n' Bitch as a good starting off book. I've been knitting for a few years, but I still keep referring to it. I didn't much like the patterns in it though, and haven't made any of them. The follow-up, Stitch 'n' Bitch Nation, is pretty good too (lots of tips and tricks from other knitters). People who know knitting seem to love Elizabeth Zimmerman's Knitting Without Tears, although the impression I get is that she was a great & amusing knitting writer, and her books may not be the best resource for beginners (I haven't read her yet myself, but I'm hoping Santa's bringing it for me).
I get most of my knitting information from the forums on Ravelry these days. There are so many members, that any query I post gets a dozen responses within a few minutes (very helpful when you're stuck and need an instant answer to enable you to carry on).
In terms of starter projects, I would suggest you avoid a scarf - lots of beginners start with one (myself included; it was my second) as it seems like an easy way into knitting. However, a scarf can be dull to do when you start out and aren't very fast, as it seems to go on forever. I love the instant gratification of knitting for babies, as small projects equal fast results.
Equipment you need - a ball of yarn and a pair of needles that are appropriate for the thickness of the yarn. When choosing yarn for your first project, I'd advise you not to go for acrylics, as although they are cheap (and therefore tempting) they are often unpleasant to knit with (I don't like the feel of acrylic passing continuously through my hands). I used acrylic for the first project I made, because it was pretty and I was amazed at how cheap it was. However, I've never used it since.
Sign up to Ravelry and get loads of great free patterns from the knitting community. And join a local stitch and bitch if there's one near you, to learn from others. I also really recommend tutorials on youtube from knitwitch - I've used her videos a lot, to learn new techniques.