Do I need a lot of tools?

The answer to the thread question is:
Yes - if you are a professional
No - if you are doing it not for profit

I have a video on essential tools and some on cool tools at my YouTube site.

Please don't be discouraged if you want to build but haven't got all the gear. Luthiers in Paracho build guitars with a knife and some string and I have seen lots of success with plenty of improvisational tools.

Buying pre-serviced kits is a good way to start...

I agree with Pete whole heartedly. We started with just a few basic tools, and added, and added, and added over the years. Our shop is now filled with tens of thousands of dollars of all kinds of tools, from heavy machines, to specific hand tools. Many of the specialized tools are not necessary, but sure do help when you do this to put bread on the table. Almost anything you can do with a machine or tool can be done in alternate ways, although having the right tool for the job saves time, money, and sometimes frustration.