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[unicorn]

Yes, that's right.
In my opinion it's necessary to have a software firewall. There are to many trojans and other weird stuff out there. Besides that it's also good to discover other kinds of unexpected, not always asked for, attempts by Explorer, Word, bla bla and others to connect places. The software firewall also checks your apps and stop their activity if they have been tampered with.

A recommended one? I would choose one with a built-in printserver if you not allready got a such little goodie. Brand is of less interest - I have been running a very cheap little box from D-link without any problems for two years now. Other may have models they recommend but to me it seems as they all do their job. You might want to go for reviews at ttp://www.practicallynetworked.com or another similar place.