I think this answers it completely, even if you're not into CrossFit. http://www.crossfit.com/journal/library/cfjissue1_Sep02.pdf

My husband has one he bought off Craigslist, and other than it's a royal PITA to put together, he seems to like it well enough. We bought a treadmill off there too. That said, it's certainly not necessary:

Home gym for under $100

• Dumbbells
• Cost: about $6 to $60 a pair Lifting dumbbells will tone your muscles. Consider getting at least two sets, one that's the weight you usually use and one that's a bit more challenging.
• Elastic bands or tubes
• Cost: about $10 to $15 each They provide resistance training for strengthening and toning muscles. Consider getting one that's a little tougher than the other so that you have two levels of resistance.
• Stability ball
• Cost: about $20 to $40 It adds variety to your core workouts. Try a 45-cm ball if you're less than 5 feet tall, a 55-cm ball if you're 5 foot 1 inch to 5 foot 7 inches, and a 65-cm if you're taller.
• Workout DVDs
• Cost: about $15 each The best include strength, flexibility, and cardio routines. You can also find free exercise programs on TV.
• Exercise mat
• Cost: about $13 to $20 for a 2x6-foot mat Exercising on the floor can be tough on the joints, so consider a pad for cushioning.

Posted: January 2009 — Consumer Reports Magazine issue: February 2009*

I second the crossfit recommendation. They give advice on equipment and how to use it to achieve an extremely high OVERALL fitness level.

A bench, a table, a pull-up bar (rings if you prefer, I recommend adjustable ones), and your body. Check out Convict Conditioning to see how to put all of these things to use. If you want a little more equipment because you don't think your body can make you strong by itself, pick up a copy of Power To The People and get the equipment listed in it (a chair, and a barbell are the only two things I remember, though I'm sure there's more). (For the record, I am in no way affiliated with Dragon Door Publications.)

Kettlebells. They take little space, and will kick your ass. Use the book Enter the Kettlebell by Pavel as your workout guide, start with the program minimum, and move on to the rite of passage. These two programs, more than any others, made me stronger and leaner.

I have used the Hoist Multi-Gym H-100, with the leg press, for several years. It provides SMOOTH and CONSISTENT resistance; is extremely well made and, after years of use, still looks new.

I got the unit with the articulated arms and recommend them, but YMMV.

When you look up home gyms, Hoist is not normally at the top of Google's hit list. Don't let that discourage you. This unit was recommended to me by a personal trainer and I have never regretted buying it.

http://www.advancedfitness.com/equip/hoist.htm