There are a couple of different variables in play here.
The first is a "trunked" system. This basically means that you have a control channel and a bunch of other channels, the control channel tells the radios in the system which channel to use. Without going into detail, a "trunking" scanner monitors the control channel and follows traffic. It's more complex than that but that's basically what is going on.
A simple "trunking scanner" will work for these systems - IF they aren't digital. If they are digital, it will more or less work, but all you will hear will sound something like what came out of your old 56K modem.
The next variable is "digital" To sum this one up, you need special software to decode digital signals. This turns the 56K modem sounds into audio. The vast majority of government radios are digital nowadays, from the school buses and garbage trucks to the police and fire departments. There are some exceptions for volunteer fire and EMS, rural areas etc.
To summarize, you can have digital trunked systems that require a "digital trunking scanner" to listen to.
The last is encryption. This one should be pretty straightforward - if the digital signal is encrypted, you'll hear 56K modem sounds again unless you have the "key." As this isn't really available to scanner users, you're more or less screwed if you are trying to listen to an encrypted system. However, some places will have the ability to use encryption but may not do so on a regular basis so you can still listen in the majority of the time.
As the previous poster indicated, you can find most of what you need to know from
radioreference.com
Use the clickable map
here to find out more about the systems in your local area.
To find out if your local systems are encrypted (and to what extent) visit this page:
http://wiki.radioreference.com/index.php/Encrypted_Agencies
To answer your question regarding a good scanner, most digital scanners will be in the mid $300s new but if you search around on ebay and other sites you can find good used ones for $150-200. I would reccomend a desktop model VS a handheld as a desktop model will be less prone to interference and related issues (opening squelch randomly etc)