I ride 5-8 miles each way. The 5 mile route is city streets. The 8 mile route is mostly bike path. I sometimes do a combination of paths and streets. I commute year round, including through cold and snow.
What kind of bike?
It depends on what kind of riding you do. Mountain bikes with wide tires will do better on bad pavement conditions. Road bikes with dropped handlebars will give you more speed. Hybrids will let you sit more upright, which is good or bad, depending on whether you are uncomfortable with dropped bars or whether you are annoyed by the decreased efficiency. A lot of commuters like cyclocross bikes (me included, I ride a Surly Cross Check). They are shaped mostly like road bikes, but they can take fatter tires, and they generally can accomodate racks and fenders.
I think the ideal width for a commuter tire is 28 or 32, but people disagree on this. Wider tires give you a more comfortable ride and can handle potholes better; narrower tires give you more speed. It's all a trade off and you just have to decide what's important to you. Most would agree that knobbies are a bad idea unless your commute is mostly on dirt trails. Knobbies are less stable on pavement (because less rubber has contact with the road) and they increase drag.
Equipment and What to Carry
I carry more than some, but here's my list:
Equipment (I put an "*" by the most important things, I put a "+" by the things a multi-tool can replace):
In seat bag:
8 and 10mm wrenches+
Second, small, 10mm cresent wrench (for brakes)
Spare chain link
Metric allen wrench set+
Health insurance card*
Spare AAA batteries for LED's*
Electrical tape wrapped around wrench
Tools v. Multi-tool
I bought individual tools instead of a multitool because I wanted to have top quality tools for work at home, as well as on the road. A good multitool would replace a lot of what I carry, but it didn't make it into my initial budget. You should be able to tighten or loosen pretty much every bolt or screw on your bike. So if you don't get the multiple little tools, I'd strongly recommend a good multi-tool. (After I started this thread, I got a multi-tool, and removed some of the other stuff from my seat bag.)
Keep at least two tubes (so that you still have a spare when you use your spare). Also think about getting the kind of things most likely to break or wear out--a chain, derailleur and brake cables, and a tire. That way you don't have to depend on the LBS being open when you get home at 6:30 having used one of your spare tubes on the way home.
In my saddlebags, I carry my wallet, work clothes, and lunch (I keep shoes at the office). I don't carry a lock because I keep my bike in a closet at work. If I have an unfixable problem to or from work, I can put my bike on the bus. In the winter, I also stick an emergency blanket in the saddlebags.
Supplies at Work
At work, I keep energy drink mix, a spare tube, and drip lube. Sometimes I need the sugar boost to get home at the end of the day. Sometimes my chain has an annoying squeek I don't want to hear on the way home. The tube is so that I can replace my spare if I use it on the way in.
Storage at Work
I'm lucky. My employer lets me take my bike into the building and store it in a closet. If you are equally as lucky, be very careful not to lose the privilege. Never enter a crowded elavator, dry off your bike as much as possible when it's wet and keep newspapers around so that you can put them under a wet bike, don't leave a mess any place, and, most importantly, treat the building staff with the utmost courtesy all the time.
You will be spending a lot of time outside, so consider using sunscreen. I only wear it on the trip home spring-fall because 1) the sun's not high on my morning commute; and 2) it makes me stink and I can't shower it off at work.
If you will be regularly commuting at night, get the best lighting you can afford. At a minimum, you need a headlight and a rear blinkie. I'd say a 10w halogen is the minimum brightness for night commuting. I used a 6w halogen for awhile, and the best I could say is that it was barely adequate. But a 6w halogen is better than no light, and is better than an LED. An LED is significantly better than nothing. A reflective vest will also significantly increase your visibility. I eventually got an HID, which I loved, until the lamp stopped working 18 months after I bought it. Cygolite wanted $100-$200 just to fix it. When considering an HID, ask the company about the cost of replacing the bulb and ballast. I'm looking for a more affordable HID with more affordable replacement parts.
A reflective vest will make you a lot more visible. I like the ones construction workers wear, like this one:
They call them "ANSI Class II." I bought my vest at Home Depot or Lowes. You can buy reflective shirts like the ones construction workers wear at alertshirt.com. (I'm sure there are other good sources, but this is where I go.)
If you only rarely ride at night, I'd suggest a rear blinkie, a front LED, extra batteries, and a reflective vest. The next step would be to upgrade to a system with a 10w (or so) halogen. I also see that there are some high-powered LED's in the market, but I haven't tried any of those.
There will come a time when you can't ride for whatever reason. It might be illness or an injury, or your bike may need a repair you can't do immediately. So have a back-up plan. For me, it's the bus.
You probably will never cause any damage to anyone, but even a scratch can cost hundreds to fix. A dent can cost thousands. There are also freak stories of cyclists sending pedestrians to the hospital. Since your auto insurance policy probably won't cover you, consider checking out a homeowners or renters policy. They typically include liability coverage. Ask the agent whether it would cover damage you cause to others while riding.
Get a bike repair manual. I bought a copy of "Zinn and the Art of Road Bike Maintenance." I checked a few different books out from the library before settling on the Zinn book. I chose that one because it is complete without being too complete, and it has a great list of tools you should have broken down by the level of complexity of the repairs you want to attempt.
Park Tools also has very good and very complete repair/maintenance information at their site.
You may be doing a lot of repairs, and it's quicker and cheaper to do them yourself. When you have a problem that you can't fix, go to the LBS, ask which tools and parts you need, and buy them there. A good LBS will be happy to give you repair advice along with its products (and to help you if the repairs don't work out as planned). I'm a total klutz, so it can't be that hard.
If you want to read about riding (some do, some don't), I like "The Art of Urban Cycling: Lessons from the Street" by Robert Hurst. He has both common sense and a great sense of humor. Also, go to the library and check out a few books near the Hurst book. There are varied perspectives on how to ride in traffic. You'll be a better rider if you read different authors with different perspectives.
Here's a thread giving the opinions of various people about how much routine maintenance is needed. But I agree with 77Univega, two keys are keeping your chain lubed and your tire pressure correct. They will make your ride smoother and decrease the number of flat tires your get.
I've been logging the edits since Mar. 25, 2006:
Mar. 25, 2006, added back-up plan information
Mar. 31, 2006, added information about repairing HID light
Apr. 10, 2006, changed format of these notes
May 5, 2006, added link to thread with positive comments about minipumps
June 15, 2006, added section on bike storage at work
June 16, 2006, added suggestion to carry extra spokes
July 9, 2006, added insurance section
Oct. 28, 2006, minor edits
Mar. 30, 2008, added reference to safety vests and shirts and other minor edits