Welcome to the Dreamcast community foog!
To answer some of your questions:
for $20 you'll find you've got yourself a bargain, commercial games for the DC are dirt cheap unless you want to go for imports, you don't need to modify your DC to play homebrew software and a pack of CDR's will cost you next to nothing to try out the free stuff on offer. The Dreamcast software available was created legally from independant dev kits, the scene itself goes through patches where everything goes quiet, then all of a sudden there's loads of new stuff released, check around the forum here for some info about what's new and old.
As a starting point, if you want to try out a small selection of pre-made CD images to burn and play straight away check here:
http://www.dcevolution.netfirms.com/
Check here for DC newbie info and help:
http://dcevolution.net/DCHelp/
Don't forget to check out all the links on each site to get an overview of what's on offer for free.
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