The 25/35$ price tag of the Raspberry Pi is really just for the chip. This is not an attempt to scam you out of more money by the Foundation, but rather because in many cases all the parts you’ll need for your slice of Pi can be found around the house!
Here is the list of necessary accessories:
Keyboard- a USB one- there are no PS/2 slots (PS/2 is the term for keyboards and mice that have a circular plug)
Mouse- also USB for the reason above
Monitor or TV- it does not come with any cables, you’ve got to provide them yourself. It has an HDMI port, which can be used for HDTVs or HD monitors. Alternatively, you could find an RCA cord or use a converter for either the HDMI or RCA ports.
SD card- you will want an SD card that holds at least 2 GB. It should theoretically work with SD cards up to 32 GB, but has trouble with some cards that are only 16 GB. See this list for the cards that are certain to work, but if you already have a card lying around, by all means try it first. If it works, you can add it to the list to help someone else out. The SD card is necessary because the RPi lacks any sort of hard drive to save space and, more importantly, money. (You actually have two options for the SD card: you can buy one with the OS (operating system) preinstalled, or set one up yourself. The price of a preset SD card is unknown right now, but considering the Foundation is non-profit, it will likely be just enough to offset the cost of producing them, so only a little more expensive than buying a new one. If you choose to make one yourself, then it’s a little more complicated. Your best chance of success is to buy one preloaded, but I think I will try to set one up myself, so you can follow that later to learn from my mistakes.)
Micro USB charger- Most modern phone chargers (with the exception of iStuff) should work just fine for this. You might have one of these lying around the house somewhere in addition to the one for your phone. Just read the fine print and make sure it outputs ‘5V’ and, if you’re using the Model A, ‘500 mA’ (or 2.5W), and if you’re using the Model B, ‘700mA’ (or 3.5W). If you see those numbers somewhere on the charger, you should be just fine.
So now we have input devices (mouse & keyboard) and output devices (a monitor or TV). We have electricity running through the circuits which is switching bytes and compiling numbers for us. We have some software running on the machine from the SD card, allowing us to easily use it. You might want some other things, though.
A powered USB hub would be wise. ‘Powered’ as in ‘plug in a separate cord for electricity so the Pi is not sapped dry’. With that, you can add many other gizmos and gadgets. You could have a USB stick or two for storage, since they are easier to remove than the SD card, and the Pi can work without them, allowing you to access those files on a more powerful computer without unplugging the Pi. You could plug in a webcam, a microphone- anything with a USB plug. On the Model A, a hub is pretty much a given, unless your keyboard has extra ports. It only has one USB port, and you won’t be able to work very effectively without a mouse!
You will also want speakers (or headphones) for the Pi, and an Ethernet cable connected to your router (or switch, or hub, whatever you use).
So there is a list of what you’ll want for a Pi. Any questions, post in the comments or see here.