All you need is an up to date AV (AVG, Avast), a firewall if you think you need one (Sygate) and MS Antispy. These are all free, there is no need for a home user to pay for any 'security' apps and paying for them does not mean that they are better. Lay off visitng Pr0n sites and refrain from clicking on 'vote for this site' ads and downloading browser 'helpers' and screensavers from commercial or dodgy sites.
Yes, there is a huuuuge and ridiculous amount of paranoia about spyware and hacking. I use AVG and MS Antispy. That is all + a bit of common sense.