1: Good. Beware, router only has lan (Ethernet) connection port, so usb modem is rubbish for this task. Better to get a router with build in modem.
2: Yes, correct in a way.
3: Some router have hardware firewall build in, but some do not.
4: Cat 5e (very cheap in ebuyer (not ebay) click here
5. Yes. I think you better to get a all in one: Modem, router, wireless access point and firewall. Many to chose from, D-link, netgear, linksys etc, personally I like D-link. The stuff will cost you around £100, you can check it out from broadbandbuyer click here