hi again,
yes, more RAM should solve your cut out problems (or at least some of them) and the more RAM you get, the easier it all will be
the Indigo comes with it's own "internal mixer" and it's sets it up in the control panel.
All you would have to do to set up a mixer is attach the cable (it comes with the indigo) from your monitor/main out and the Indigo on the laptop. Keep in mind that you'll only be able to record either one instrument (bass, guitar etc...) or one stereo track (full p.a. mix) at a time. It'll record in two track stereo if that's what you want.
The Indigo will work with everything except for Pro Tools (like anything of course). This includes: Cubase, Sonar, Logic, and even Gigastudio! ....that's pretty nice

Echo is known for making very good products and drivers that are compatible with current computer software.
I got a chance to play around with the UA-20 which is the Edirol version of the US-122. I was getting a lot of skips and pops as well.... I really think it has something to do with USB 1.0, I'm not sure. But if you notice, there are no USB devices (that I know of) that record at 24/96khz....and this is the reason I went with the indigo. That, and the fact that I can just attach it to the laptop.
so yeah, upgrade your RAM and see if that fixes the problem. That's your cheapest solution. If it doesn't work, check out some other options (like the Indigo or Firewire devices)
Adam