First, by your screen name I'm guessing you are a TOOL fan?
OK, two recommendations.
1) Inexpensive, but nice sound? A wired Shure PG58. They go for around $60.oo and soud VERY nice for the money. You want to pay less? Shure was private labeling for Radio Shack for awhile. If you can find their model# RS-230, it's the same mic at about $40.
You could even get a PG48. Also sounds great, and in some rooms even better than an SM58! Around $40
2) Though KaraFun is a cool bit of software, I STRONGLY recommend that you buy a player, and possibly just use your PC to mix.
A PC's disc drive is not all thet durable, and constant or heavy use will evenually break it.