Electric. I'm realizing that if I want a not-cheesy sound, I'll need to just record the amp with a microphone, right?
You can spend money on an emulator or processor. I've heard them that sound great. Once you find what you like setup is a snap. Personally I preffer putting my money in hardware that I can use for other things when possible.
I also like to be able to have some interplay with the amp if I want, for feedback, sustain, etc.
I've heard some killer tones out of the line 6 gearbox set up, just to throw it out there. I've also heard some pretty great sounding metal crunch out of a boss gt-8 run direct into the interface.
One thing to keep in mind on the microphone technique is that every thing in the chain has to be up to par. That means guitar, amp, microphone, technique, etc. The room is ussually not much of an issue because of the typical close proximity of the mic to the amp and the the volume of the amp.
A microphone (sm57) , boom stand and cable will set you back around $150 US. The amp does not have to be super loud or big as long as it sounds good and doesn't hum like a mother.
Just some thoughts for you to think on.
Good luck.
F.S.