You should definitely use a microphone, something like headphone/mic combo for your narration. They also make headsets with a USB connection, which basically acts as an separate sound card.
I've used Vegas since it was originally developed by Sonic Foundry. As I understand, most musicians and studio techs at that time were using it more as a sound editor, for mastering CDs. That is until users began to discover that it also does video.
In any case, I'd recommend downloading and trying the free 30 day trial to get a feel for Movie Studio's workflow.