Am I the only one recording with a headset microphone?
Where should I go next if I want at least a little better recording quality? nothing too expensive...

Plug the guitar into the PC?

Hm...how?

There are things like the Stealthplug that let you plug your guitar into a USB socket. Obviously it won't be processed by your amp then, you so need a digital amp modelling software (which comes with Stealthplug).

Or get the jack conector to be able to plug it into a smaller jack (hole) in the PC. It will be better quality sound, cause it will go through your sound card.

Honestly, recording with a headset mic will be a lot better than plugging straight in to a shitty sound card or using one of the USB to guitar cables.

What is your budget, and what are you working with as far as guitar, bass, software, etc.?

Well, nearly nothing at moment, underaged n' shit, getting money from parents...
I work mostly with Audacity

get reaper, and learn about mixing, eq'ing and stuff, experiment with miking and so...

recording guitar... both styles has pros and cons...

through the soundcard, with quality ampsim, you get better sound (be aware of feedback, if you dont have DI box, or some sound interface)

miking the combo can make somehow custom sound, but you should have silent pc, and experiment with mic position...

i know about myself and one more person, who use headset (cheap) mic... mine isnt from headset, but its still 3 dollar(69 CZK) mic...