Hi malibu65k
No you do not need a router for anything if you have only one PC. You can just forget there is such a thing called a router. A router is no protection in it self. To get extra protection you need a router with a firewall.
What you need a router for is to connect multiple units. Most ppl who claim they need a router these days, really need a
HUB. When concidering to buy a router there is a few things that are important: Do you need wireless transmission? If so, get a WLAN router. Do you need an external firewall? The one included in windows is no good. It has the same holes as the rest of windows. With an external firewal you are safe, whlie with an internal firewall you get the feeling that you are safe. Which one would you go for? If you dont want to connect to the internet you need not worry about firewall.
When all this is said, there seem to be some confusion around these names. At least in my area. Sometimes the ASDL-modem is called a router because it routs traffic and it is definately NOT a modem as it does not modulate. The same can be said about all digital-line hardware (ISDN, cable aso). The fact that these are based on digital datatransmission should tell you that there is little point modulating the signal to fit on the analog phone lines. It not going to the analog phone lines at all. Sometimes the ISP's use combined (so-called) cable-modems and routers/hubs/wireless routers and if they do,, they will refer to the unit as a router.
But no, you have absolutely no use for a router if you only want to run your stand alone PC at home without connecting it to anything.
If you wish to connect to the intenet on dial-up modem, use a software firewall and a virus protection that you can update (otherwise its worthless). I recommend Norton Internet Security if your PC can handle it. (Mine can't) If you need anti-virus without firewall I would recommend a program called Avast. Its easy and free (if you are talking about home computing).
If you want to connect to internet via permanent connection (f.x cable or adsl/ssdl, or T1) you should get yourself proper protection in the form of an external firewall. I am running D-Link my self but others may be just as good. I do not recommend running Windows XP firewall on such a setup. I have a cable line, and before that I used ADSL. On ADSL I used XP firewall and I detected about 40 break-in attempts each day. When I changed to Cable with external firewal I detect about 150 break-ins a day. Imagine what would happen if my PC had to block these during my game.... Software firewalls are to slow, and the slow down your PC. If you want to run software firewall, get hold of a seperate PC and pout it in there. Then connect through that PC to the internet. The firewall PC does not have to be great. The old one will do when you buy a new for instance.
If you need to connect a few computers at home you use a hub (cheaper than a router) or a router lacking firewall (router allows more units I think).
But have you thought about how much cooler you'd be if you had a router??????? This is the most common reason to nuy one if you ask me

))) Just kidding.
A router should cost about 40$ without wireless and firewall. With firewall its a bit more expensive, and a wireless router is even more expensive (I'd estimate 100$+ but I live in Norway so US prices are unknown to me)and in adition you'd want a wireless network card to connect to the wireless router. A wireless router can connect up to 99 pc's (normally) plus the 4 cable connections (also this normally, may be more), plus the WAN (internet). How's that for gaming setup. No more driver installation and no more to short cables.....
Hope this helps.