I'm using a M-Audio Firewire 410 into a Macbook Pro running both Logic and Pro Tools (though at present Pro Tools needs a £60 patch to work with Intel Macs), using a combination of line in and mic'd guitar and bass sounds, depending on what I'm aiming for and how much time I have available to record.
Generally Ill record the line signal of the guitar, and then use a plugin to get a 'general' sound, and then feed the clean sound into my amp at a later date and mic the amp up - especially for distortion. You can then get a nice blend of both mic'd and modelled sounds, though obviously depends on the track in question.
For monitoring I'm using Sennheiser headphones, mainly because I have no cash, secondly because I'd like to keep my neighbours happy when I'm mixing stuff at 3am. Want to invest in a nice condenser mic for vocals, but due to monetary restraints I'm stuck with an SM58, does the job for demos or maybe BVs, but will still need to go to the studio to record the lead vocals.
Drums I would also record at the studio and edit at home, but final mixes would always be done at the studio. My setup is a recording/editing place, not a mixing place.
I suffer not from this latency you speak of
