• Resolution: how many pixels a scanning can sample in a given image; how much detail that is captured.  Optical resolution is how many pixels a scanning device can actually "see".  If a manufacturer offers an optical resolution with an odd number (like 300x600), the device is sampling more frequently in one direction.  Go by the smaller number. Interpolated resolution is a measurement that involves the scanning device taking an educated guess.  A scanner can have an optical resolution of 300x300 and an interpolated resolution of 600x600; in this case, it's just guessing at how to fill in the blanks.  Ignore interpolated resolution; scanning quality usually goes down when it's used.  (Scanners are up to some pretty high resolutions now, but you don't necessarily want to pay more for more resolution.  The higher your scanning resolution, the larger the file size.  If you don't have a LOT of file storage space, you probably won't need higher resolutions--unless you're scanning very small things--like slides-- that you'll want to enlarge a good bit.  A maximum of 600 dpi will work well for almost everything.)
• Dynamic range : how wide a range of tone the scanning device records (tonal differences).  This is measured on a scale from 0.0 (perfect white) to 4.0 (perfect black).  Most scanning devices have trouble distinguishing the differences between colors at either far end of the range.  An average dynamic range for scanning devices is 2.4; anything above 2.8 is considered high-end.  (Strangely, when manufacturers list the specifications, they often don't list the dynamic range.  You'll have to ask, and sometimes even then, the salesperson will have to consult his colleagues and call you back with the answer.)
• Bit-depth (color depth) : how deep the amount information a scanning device records about each pixel (the maximum number of colors that a pixel could be assigned). 1-bit would only allow black and white; 24-bit allows 16 million different colors (theoretically); 36-bit allows billions of colors, but some software packages can't handle anything bigger than 24-bit.  Even so, it is better to choose a scanning device that allows for the higher bit-depth because the extra data can help software programs correct for "noise" in the scans.

 So, what hardware and software should you buy?

• Your PC should be as fast as possible, with as much memory as possible.
• The monitor should be at least 17" (21") if possible) with a dot pitch .26mm or smaller.  The display should be at least 256 colors, 24-bit color.
• Image Processing Software: There are several different imaging programs available. Your choice will be affected by your needs, the skill of your staff, and the funding you have available. Photoshop is considered top of the line.
• OCR software: You only need this if you're trying to convert a typed page into an electronic format without rekeying.  It's good for some things, not so good for others. The USM Libraries Digital Program currently uses Omnipage Pro and has had good results.
• Scanning devices : Even though manufacturers may stress interpolated resolution, ignore this number.  It is only optical resolution that matters for digitization projects. 600x600 dpi is fine for most projects.  Shoot for a minimum of 2.9 dynamic range and 36-bit color if at all possible (even if it will only export 24-bit color).  Note that there are many other types of scanning devices besides flatbed scanners.  Often the software that comes with the scanner can make a big difference; you want scanner software that allows you to control the scanning process as much as possible. 
• Scanning bed: Most readily available scanners have a letter-sized scanning beds.  That will work for a lot of projects, but get a legal-sized bed if you can.  For really large objects, you'll need a tabloid scanner or a digital camera set-up, which can get pricey.
• Document feeders: Some scanners come with these as an option.  Theoretically, they can speed up the work.  However, they are definitely NOT recommended for archival materials or one-of-a-kind materials or photographs.  There is always the unnerving possibility that the feeder will "eat" your document (possibly why it's called a "feeder").  Unless you plan on photocopying everything first, don't bother.
• Transparent media: If you plan to digitize slides, film, or transparencies, it can definitely pay to get a scanner equipped to deal with transparent media.  Some scanners come with an odd-looking attachment to accomplish this, but a scanner with a special tray and differently-sized inserts is recommended.
• Scanner speed:   The faster the better.  Some scanners with otherwise good specifications are excruciatingly slow.  That's fine if you aren't doing a lot and don't mind the downtime, but it's worth paying more for more speed.

There are several resources that can help you choose equipment and/or software.  Digital Photographer magazine (usually available at major bookstores) does regular reviews of equipment.  Online resources include:

http://www.flatbed-scanner-review.org/

http://www.imaging-resource.com/

http://www.pcphotoreview.com/Scanners/PSC_3792crx.aspx