Well, you can do that kind of evaluation with a simple digital recorder (like a Zoom H1) in the room. Is your plan to have a mixer that can transition to something for live use, or is this solely for recording the group at home?
A mixer like the one you described is only going to let you create a stereo track, and then the levels, FX, EQ that you've set on the mixer is what you're going to have recorded, with little chance to correct problems with individual tracks, i.e., do the mixing step that is traditionally done when creating a recording in a home studio.
Using inserts and the like for a band are (IME) usually only done with larger setups involving rack mounted gear, or perhaps in semi-permanent locations. If you're looking for something that has the capability to just record in stereo with some built-in FX, and the possibility to use it as a live mixer, then something like that Yamaha may be appropriate. If you're thinking about setting up to create recordings, collecting a few mics, and then wanting to do actual mixing of the recorded tracks, it's not whare I'd start. For that, a simple interface that is designed to provide some microphone preamps and allow recording individual tracks is more useful. When using one of those, it's common to add and adjust the effects during mixing.
There are also mixers that provide digital output so you can have both a live performance mixer and recording interface in the same piece of equipment, but they are more expensive. At the price point you've suggested, you get one or the other.
