Definitely Garageband. It comes free with new Macs, is $49 if you’ve already got a Mac. (You could get a low-end used G4 for probably $400.) Actually, for $49 you get Garageband, iDVD, iTunes, iPhoto and iMovie. All which are great apps.
It comes with over 1,000 royalty-free loops, all categorized by key, mood, instrument, all sorts of things. (“Noodling guitar” key of C, for instance). Tons of these, and some third-party sources are offering free Garageband loops or selling them. Garageband has started a whole revolution of new musicmakers. It’s amazing.
I don’t have a strong music background (just some piano) and I made this piece after having Garageband for a few days. (It’s not much, but hey—I’m a newbie!) I have never used any music composition app before this, and yet I made my first finished piece after about half an hour of installing the app. It’s that easy to use. Imagine what you could do if you had, like, real musical ability. (Which I assume you do! :))
It plays back live. I lay down tracks and then add a new track as the other tracks are playing. It will record voice and you can plug in your guitar or keyboard and use the software instruments.
An additional $99 will get you Jam Pack, which has 2,000 more loops and a lot more software instruments. I don’t have JamPack yet, but word is that it is unbelievably awesome. Other loops will work with Garageband, and you can make your own loops (or covert other loops you find) for Garageband by using Apple’s free Loop utility.
There are a ton of Garageband communities cropping up, where you can hear samples of what Garageband can do. Check out MacIdol.com or iCompositions.com for starters.
It’s important to note that Garageband is not a professional level music app. It may be close for some but for pro-level, you need to pay a lot more. And it’s also version one. It’s pretty fabulous right now, but obviously it will be much better in its next incarnation.
Sorry if I’m sounding like an ad for Macs. I do have a PC (it’s faster than my Mac, as a matter of fact) but so far I haven’t found anything on the PC side that is as cheap, as easy to learn, and has as many loops. If someone knows of such an app, please point me to it as well. I would definitely use it when I’m on my PC.