[woodcote]

To try and answer your questions...

1. Yes, definitely a good idea to update the firmware - although it's not 100% essential. You'll need the USB to powerbase cable - either borrow or buy one. If you buy it, you'll have access to the excellent PC-based software programmes such as SSDC and RCS64 etc. If you use the standard LCD display, then Chris' guide is invaluable: http://lescazals.free.fr/scaley/c7042_menus_109.pdf
   
2. The C7024 and P9300 are identical. The only time you should avoid mixing power supplies is when going outside the Scalextric/Hornby product range. And for running the analogue mode (one car per lane), you only need one power supply. Indeed, one power supply will be adequate for four standard digital cars.
   
3. The C8229 etc analogue hand controllers will not work with a digital powerbase - and the jack plug is too large in any case. Only use the C7002 (or Truspeed SSD) controller with the C7042 6-car powerbase - whether you are using digital or analogue mode.
   

I hope that helps! The C7042 is perfectly good out of the box. What I like is that you can then upgrade at your own pace. What's described in this thread is the ultimate set-up - but you don't have to start there to really enjoy the system.