Recording live into Cubase 5.?

I want to record a acoustic set live into Cubase 5. I was wondering what I should use to capture a good sound. I have a way turning my ipod 4 generation into a digital condenser microphone and using the head phone output and taking an audio cable and running into my mic input of the laptop but I'm trying to think of some better ways to do this. Should I use the M-audio preamp mic buddy and a Shure dynamic mic ? Or do you think it's a better idea to use the Blue Berry pod casting USB microphone? If any one can shoot me some ideas on how to get a good clear sound please let me know. Thanks