If you have a DV camcorder that has a jack for an external microphone, you can’t go wrong with this $6.99 mic kit from Geeks.com. Being able to get up close by attaching it to the interviewee or putting it between two people who are talking makes a huge difference in the quality of your video. You could also hang it from a broomstick and use it as a boom microphone. The kit even comes with batteries and a case. The only criticism I have heard is that you might pay as much in S&H as you do for the mic.
And for tips on improving sound, we go to our intrepid film makers, Xander and Calvin on AFI’s ScreenNation: