And hence we slip into the next question!
What is the purpose of the recording? Do you want to make demos to send to a record company? Are you going to make a finished product? Or have you just realized that recording music is a insanely fun?
Demo: 2 tracks for a drum machine will be fine. The A&R man could not care less if the bass drum is a bit muddy and the conga could be panned a bit more to the left. On the 6 remaining tracks you can put two guitars, one bass, vocals and backing vocals and some keyboards with some nice strings or so on there. And putting more than that on a demo is overdoing it anyway!
Finished product: 8 tracks is pushing it. I'd go for at least 16. If you use a lot of keyboards, 8 can do fine if you can sync them and you have a huge mixer...
Insanely fun: Buy the best you can until your girlfriend/boyfriend/wife/husband/wallet has a fit!
In the two last cases try to make sure you have a clean upgrade path. I.e. if you buy a portastudio, try to get one with dedicated outs for each channel. That way you can hook it up to a mixer later, and still use it for recording. When you buy a mixer for your 8-track, buy one with 24 channels, so you can upgrade the 8-track to 16 without having to buy a new mixer, and so on. Always make sure that what you buy is better than everything else you have. Otherwise you'll end up with having to buy everything new at one time to get a better sound.
This doesn't go for the demo case, because then you just buy a porta that fits your needs, and stick with it until it falls apart. Demoes used to be trickier, since making a good demo on a 4-track casetteporta is tricky. But an 8 or 16 track digital porta with builtin effects will get you VERY far into demoland.