While it's definitely important to use quality mics and good preamps, I think it's far more important that you know how to properly place your microphones to get the best sound. Spot, distant, ambient, stereo, and combined miking are the five choices you have to choose from.
Spot Miking: This placement is also known as close miking for obvious reasons. It basically means that you are placing the mic close to what you are recording. It's often used to cut the room sound out of the recording. Most home recordists don't have an acoustically treated space to record in so they generally don't want much of the room sound.
A big reason that people choose spot miking is so that each instrument can be isolated when many instruments are being recorded at once. That will give you more flexibility when it comes to mixing.
The closer your mic is to the source the more bass that will be recorded.
Distant Miking: This usually means placing the mic about three or four feet from the source. People usually choose distant miking when they are trying to get a more natural sound.
The biggest negative with distant miking is if you are recording multiple instruments at once you may get "bleed" from another source which makes mixing more difficult.
Distant miking also means that more of the room sound will be recorded. Unless you have a good understanding of acoustics and your room is well treated then this is usually a bad thing.
Ambient Miking: This means you are placing the mic far away from the source that the room sound plays a big part in what you are recording. Clearly with this technique you will want to have a good sounding room.
Stereo Miking: This means recording with two mics to capture the stereo field of your source. One mic will be panned all the way left and the other all the way right.
If you want to take this concept to it's extreme then you want to look into binaural recording.
Combined Miking: As the name implies this means combining two or more of the above techniques. The possibilities are endless. I think it's a good idea to really master the top four techniques before you try to mix different techniques together.
One common technique is to mix a close mic with an ambient mic. That way you still get the attack from your source but you also get the ambiance that you want to capture. If you have a good sounding room you can get a good natural reverb using this technique.
Mic placement is an extremely important part of getting a good sound. It's important to learn how different mic placements sound and to keep experimenting with different placements until you get the sound that you want.