Right, this is exactly my area of expertise.
From the sounds of it, the exact program you're looking for would indeed be Ableton Live, or possibly FL Studio, because they are specifically designed for loop-oriented music. I've been considering getting Live myself because I'm increasingly finding my DAW (Digital Audio Workstation) of choice REAPER isn't the best for MIDI-type stuff.
Ableton Live has a lot of very interesting features, and comes with some built in instruments. However, you do have to spend extra for the full Suite of instruments, and it is a fairly large jump in price. Fortunately, that's where plugins come in.
In the computer music world, instruments, effects and processors are what's called plugins. They're little pieces of software that plug-in to your main software (in this example it'd be Live) and can be saved and stored with anything you save in the program. For example, synths, reverbs, guitar amp modellers, and all kinds of fancy stuff. And the great news is, there are a lot of very good free plugins out there if you scout around. If you really get into it, then some commercial plugins you will want to buy, but at least when you're starting out there's a lot you can play around with for free.
I would advise, if you are just beginning, Live LE is the way to go, because a lot of the limitations it has are, for the beginner, things you just won't need at first. Then later you can upgrade to the full Live. But of course, before you rush into anything, try out the demo.
14 day free Ableton trialsI'd advise you spend time playing with that, running through any tutorials they have, and seeing if it works for you.
Oh, and there's a great magazine I get called Computer Music, that has a LOT of free and demo software every month, along with a large library of instruments and effects built up over the years, along with useful tutorials and what have you. It's well worth picking up an issue of that when you're starting out - got me a long way in the beginning.
For more free stuff, reviews and stuff, check out the
KVR Plugin Database.
Regarding hardware, if you're just planning on programming MIDI notes, drum patterns and what have you, then you're probably all set - although I would definitely advise getting a pair of semi-decent over-ear headphones, somewhere in the region of £30 if you don't already have some.
My best advice is to not spend money until you know something is worth having, and if possible, grab any free trials you can.