I use this method myself. My camera doesn't have a mic input, and I like the flexibility of not having my subjects tethered to my camera anyways.
I bought an Olympus WM-400s on Amazon for around $60 US. It's got 1GB of storage (which is plenty for me), and records in Windows Media format in full stereo. I primarily use it with a Tascam ts-st1 stereo mic that I picked up for about $30. Together they give a nice clear sound in a small, portable package. I don't claim to be an expert, but this configuration works for me.
The fun part is syncing the audio with the video. But I use the ambient sound from the camera's built-in mic and fiddle with the secondary audio until the echo goes away, then mute the camera audio.
PowerDirector 10 Ultra
Dell XPS Studio - i7 3.4 GHz / 8 GB RAM / Windows 7 Professional 64-bit