I use a Canon Eos 30D, but I think the quality of the photos depend more on which camera objective lens you use. I have a Canon macro lens EF 100mm 1:2.8. It allows me to get sharp photos and get real close. See pic and read more about the objective here.
When it comes to the camera - it´s very important that you can adjust the white balance to avoid yellow photos. But I think most of the digital cameras can do that today.
My studio setting is a chapter of it´s own. Must be the cheapest one ever. It´s built with and IKEA laundry bag that gives a smooth perfect light. It won´t work with larger objects than jewelry but for that it´s perfect.
Jeffery Ball has another idea on how to build an unexpensive photo tent. Read more about that at Digital Photography School. It´s great to start with an unexpensive tent and then perhaps buy a real professional when you gotten a grip of taking photos.
Of course there is a lot of tricks with the photos to. You have to find the right angles and preferably your own style too. Props or not is another question.
Table Top Studio has great tips about taking good pics of your jewelry.
Home Jewelry Business Success Tips has some good advice too.
But remember to be personal. Try to find your own style!