Hi,
1. Yes, buying a better quality mic would be good, because from what you describe the one you currently have is 'really bad'.
Ok, if you're serious about recording dialog/voiceover, then you should invest in a proper mic like an AKG C414, or a Neumann TLM103, which would cost around £500, plus a decent mixer or preamp. Too expensive unless you're doing it for a living.
Probably ideal for you would be something like the Samson mic that plugs direct into USB - bypassing the soundcard. Costs around $99 I think:
http://www.samsontech.com/products/productpage.cfm?prodID=1810&brandID=2
Pretty basic but a good starting point.
Avoid crappy mics that come with computers or internet telephony ones - they will sound awful.
2. 'Better' soundcard is purely subjective. A soundcard with a lower noise-floor on the analog input would be 'better' than one that is noisy. Also, a soundcard with 8 ins/outs would be 'better' than one with just 2 ins/outs. It all depends on what you need for your work. People on this board shoot off about their 16 i/o cards, because a lot of people here record mutliple musicians, whereas I get by with just 2 ins/outs, as I'm synth-based. Decide how many ins/outs you really need and go for that. If your current soundcard does the job, then stick with it - I used the onboard sound for about 6 months before I upgraded.
Look for the hardware you need. Do your research. And don't ever, EVER listen to anyone in a shop.