I use Fasthosts for my domain registration, web hosting and email - they are reasonably priced, but others are cheaper (I specifically wanted Windows based hosting, which limits the options, most of the cheap options are linux only).
I did look at 1&1, but my recollection is that you did not actually end up owning the domain - they registered it and held it themselves, with you using it - which could make it difficult if you wanted to change hosting companies later. Worth checking (it may no longer be the case).
It costs me ~£10 / month, but that gives me more web space and email addresses than I can use!
The big feature I like about having my own domain is that I can create as many dummy email addresses (they simply forward things to another email address) as want - so I have a different one for EVERY time I have to provide a new company with an email address - whenever I get any spam, I know exactly who has leaked my email, and cna easily block it!