After years of studying for Cisco certifications at every level I can honestly say there really is no substitute for having hardware to practice on. Cisco devices are very expensive but you can usually find some used hardware fairly cheap. For the CCNA you would probably only need 2 - 3 switches and 2 - 3 routers to get a good handle on how they operate and the syntax of Cisco's IOS. I would suggest something similar to the following setup if your looking at setting up a good practice lab relatively cheaply.
2 x 2950 - ex. WS-C2950-12 (approx $70 a piece)
1 x 3550 - ex. WS-C3550-24-SMI ($300 or less)
1 x 2611XM - ex. CISCO2611XM (approx $150)
2 x 2610XM - ex. CISCO2610XM (approx $80)
That's almost $800 but if you're set on learning networking and getting the certification its not a bad investment. But defiantly shop around. Ebay, cablesandkits.com, world data corp. are some of the sources I've used but they are far from the only places. And don't forget you can usually sell the stuff when you're done and re coupe some of the cost.
There are some good router simulators out there like dynamips (gns3 if you use windows) but they usually require you to provide the ios software. Switches have specially built hardware (ASIC) so simulating them is much more difficult than a router. At the moment I don't know of any cheap but also good switch simulators.
As far as building your lab I would bet after a little reading you will have a better idea how to hook the devices together. Usually for a lab set up you would power the devices on and cable them together to make whatever topology you are going to study and then use a console cable to practice configuring them. You can use the devices themselves to generate some traffic accross the lab network you've built and use your computer as necessary to watch the packets using something like wireshark.
Good luck with your CCNA!