General :: How To Get A Decent Emacs Setup

I am currently interested in switching from vim to emacs.One of the more compelling reasons for this is the smooth integration with a unix environment. The most experienced emacs users I have seen have a bash prompt at the bottom of their window, with stdout going to a buffer right above it. They then interact with the output of programs such as grep in interesting ways.I am on Ubuntu 10.04 and the default emacs environment does not seem to do much for me in the way of integration. For example, in the M-x shell mode, output from basic commands like ls produce lots of strange characters and hitting the up arrow does not go to previous commands.