There is an excellent FAQ on Sharpening that includes this passage on what kind of stone.....
"What Kind of Stone?
Basically, a stone needs to cut metal off the edge. The stones below do this well, and for most of us our time would be better spent actually learning how to sharpen than worrying too much about the minor advantages of one stone vs. another. Get the biggest stones you can afford and have room for. Big stones make the job much much easier. The time-honored stone is the arkansas stone. Soft arkansas stones provide the coarser grits, with harder stones providing finer grits. Many people use oil on these stones, ostensibly to float the steel particles and keep them from clogging the stone. John Juranitch has popularized the notion that oil should absolutely not be used when sharpening, and indeed results from people using arkansas stones without oil have been very positive. However, if you have ever used oil on your arkansas stone, you need to continue using it, or it will clog. If you never put oil on your arkansas stone, you will never need to. Synthetic stones are very hard, and won’t wear like natural stones (a natural stone may get a valley scooped out of it over time). They clean well with detergent-charged steel wool, I use SOS detergent pads, they clean very very fast and very well. I know you’re thinking that cleaning with steel wool will cause the stone to shear off the steel wool and fill up the stone even worse! But I assure you that is not the case, for whatever reason SOS pads clean synthetic stones, they do not make the stones dirtier. Spyderco and Lansky are some manufacturers who sell synthetic stones. Stones with diamond dust embedded in them cut aggressively. You can remove metal very quickly if you need to, but be careful lest you remove too much too fast! DMT, Eze-Lap, and Lansky are some manufacturers who sell diamond-based hones. Some diamond stones have the problem that the diamond dust wears off quickly, leaving you with a useless stone. I have experience with the DMT stones, and can say that they do not have this problem. Japanese water stones come in some very high grits—I’ve seen all the way up to 8000! The grit system on these Japanese stones is different than that found on American stones, but 8000 grit Japanese still comes out at over 2000 grit American. The stones sit in a water bath, and a slush forms on top that helps the final polish. Don’t know any manufacturers, but Bob Engnath and Gorilla & Sons both sell Japanese water stones. Both Japanese water stones and natural stones will eventually dish out in the center with use. To flatten them back out, put some sandpaper on a flat surface and rub the stone top on it. Wet/dry 400 grit sandpaper mounted on a table top or glass is reputed to work well."
I have also seen arkansas stones at factory outlet kitchen stores for $10-$15 for a set. Highly reasonable I believe. Back then I recall that I didn't feel I knew enough about stones to get one because I wanted to get a good one. (I may have to go back and pick it up!)
This FAQ covers the following topics thoroughly... I highly recommend it.
II.* The Fundamentals of Sharpening
· Getting a sharp edge
· What angle?
· What kind of stone?
· Should I use oil or water on my stone?
· How fine should my stone be?* Important notes on grits!
· Using a steel
III. Putting it all together
· Freehand tips and tricks
· Why does my knife go dull so fast?
· Keeping bevels even
· Putting it all together
IV. Sharpening The “Differently-Ground” Blade
· Those pesky serrated blades
· The Moran (Convex) edge
· The chisel-ground edge
· The recurved blade
V.** Overview of various sharpening systems
· Clamp-on sharpening guides (Razor Edge, Buck, etc.)
· Clamp-and-Rod rigs (Lansky, Frost, etc.)
· V-type sharpeners (Spyderco Triangle)http://www.vbe.com/~seoman/Pages/sharpfaq.html