You do not need to attach either computer to your phone line. You can set up a network in this way, but to be honest there's no point because the computer you use as a server is stuck in the corner of the room by the phone socket and has to be switched on at all times to ensure instant availability for the 'wireless' machine.
Bellie has pretty much nailed it - an Apple Airport Extreme base station is the easiest way for you to connect wirelessly, especially if your laptops are Macs (Airport works equally well with PCs though). You basically switch it on and off you go, and both computers can go wireless.
Airport is not the cheapest option however. You can get other kinds of 'Wireless Router' (for that is what an Airport is) - the one most of my IT techy type mates would recommend is the Linksys WRT54G (about half the price of an Airport Extreme Base Station). Bear in mind though, that routers are still generally viewed as specialist hardware, not consumer, and they are not always easy to configure initially - Airport is, however, designed for consumers so is easy to get going.
If you go for a router other than the Airport, I would not recommend an all-in-one ADSL modem and router. All you're doing is putting two seperate pieces of technology in one box, and ensuring that when either the modem component or the router component fails, you have to replace the lot. I understand there can be other complications too but as I've never set one up I can't comment.
Now, as for the laptops, make sure that they are equipped with Airport Extreme wireless networking cards already, and not merely 'Airport Ready' - Apple likes to advertise all its computers this way, but all 'Airport Ready' means is it has a slot where you can attach a network card and a little aerial to help it communicate with the base. An Airport Extreme card is really just a Wireless Network Card of the type Jenkel is describing, but designed for Apple computers. They will 'talk' to whichever wireless router you buy, because wireless routers essentially all 'talk' the same language.
So, as to what you need to buy:
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A microfilter, which plugs in to your phone socket. You will already have one of these if you're on broadband.
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An ADSL modem with an ethernet port. USB will not do. Unfortunately, most broadband internet service providers' free ADSL modems are USB-only, which is a bit sad and ridiculous, seeing as ethernet is designed for this sort of thing and USB isn't. But there you go. An Ethernet port looks like a telephone socket, except it's bigger. It may be labelled 'RG45'. If your modem doesn't have one of these, you will need to buy one that does.
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A Wireless Router. A good model for performance and price is the Linksys WRT54G. Best buy for sheer ease of use is the Apple Airport Extreme Base Station.
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Airport Extreme cards installed in all the computers you wish to roam wirelessly round your house with.
Put the microfilter in the phone socket, put the modem in the microfilter and then attach the Airport Extreme base station to the modem. At this point you might have to connect one of the laptops to the base station by ethernet cable in order to access its setup screen - I'm not sure on that, but there will be instructions in the box! Thereafter, however, you will be wire-free.
Hope this is useful! If you need any more specialist help, I have some friends over at Cable Forum who have oodles of experience in setting this sort of stuff up. They'll be happy to help.