On advice from Richard and Anahata, amongst others, I bought some Sennheiser e835's and they're lovely for women and higher-voiced blokes. They sound much, much better than SM58s, and you can pick them up for around £40 on eBay. (Beware that there are fake e845 mics going around on eBay - I got ripped off on that. Don't seem to be fake e835's around though, and buy from a decent place for safety.) They don't seem to work as well for deeper and rougher voices, being too transparent, so an SM58 (or PG58 which is cheaper) might be better for deep-voiced blokes.
You stand in a semicircle around the one mic - then if you have a solo you move a little closer.
Presumably though you'd need an omni mic, thereby stopping you using foldback because it guarantees feedback, and potentially opening the door to feedback anyway when the sound from the main speakers hits the back wall and comes back again. And getting close to a single mic with a squeezebox will actually *reduce* the sound reaching the mic, since their noise is coming out the ends instead of out the middle.
Marilyn, your point about "do you need amplification?" is worth considering. If you're only playing pubs, it's quite likely that you wouldn't, except maybe for the recorder which is generally a bit weedy - remember that the recorder player's mic wants to be pointing at the player's mouth (or technically at the fipple, but getting them to aim their gob at it is a good start). You *will* need amplification for the vocalists though.
To see how it's all going, it's worth spending £20 or so on renting a local church hall that's about the same size as where you're going to be playing, and have a trial run. That'll give the sound-person a chance to try stuff out before doing it for real, and it'll let you find out whether your music really is filling the room enough. If it's only particular instruments that aren't carrying (most likely the recorder and whistle) then you can get mics for those and leave the noisy ones (squeezeboxes) to their own devices.
If you can get a mixer with built-in FX (ie. built-in reverb/echo) then definitely get that. Reverb is the single best thing you can do to improve sound, especially for voices, and you'll really miss not having it.
For leads and mic stands, Thomann take some beating. http://www.thomann.de. Also Digital Village at http://www.dv247.com are cheap. Between the two of them and eBay, you're going to get the best prices for stuff. Thomann have own-brand gear which is OK, as well as the usual branded stuff.
The question no-one has asked yet: How much were you thinking of spending, and how long do you want this gear to last you? £400-500 should be enough for some decent-quality kit that'll last a while. But if you were thinking more in the £100-200 region, you'd want to be checking eBay for deals and doing a lot of web research.