I have always been a believer that you get what you pay for.
Whilst many people like and choose AVG Free, I have found in the past that it has let malware into systems running it. Perhaps the latest version has improved on that front, but I found it to be a resource hog on the machines I tested it on... Having said that, I use it on virtual machines as it's free and is at least some form of anti-malware protection.
I have personally used Kaspersky Internet Security for 4 years and would wholeheartedly recommend it. It's use of resources is moderate, it's easy to use and blocks everything out-of-the-box so to speak...
I have purchsed licenses for 7 machines in my house, most of my family and friends use it and now swear by it - including my father who refused to ditch AVG for some time... until I installed KIS and he saw how much more responsive his PC was... Licenses are cheap, 30% renewal discount every time I renew my license and if you have a valid license, then you are entitled to the latest version unlike other companies that charge you for the "2010" or "2011" version when it's released.
On the topic of whether or not its necessary to have an Internet Security suite versus plain old Antivirus, I would say you are probably OK with just AV as the Windows Firewall has been massively reworked and refined since the days of Windows XP... BUT, better get some form of AntiSpyware too if you're going this route!! (unless you get KIS)
I hope this helps in some way...
zYb