I like to print at 300 dpi if at all possible. So you'll have to figure the largest print you might want to print and set the scan dpi for that. If it's an 8 x 10 you'll need 3000 x 2400 pixels. So for an 4 x 6 you'll want to scan at 3000/6 or about 500 dpi. Most scanners will have a standard 600 dpi setting. If you plan on a larger photo do the same math.
If you have slides to scan then you'd probably want to up the resolution to about 2400.
As far as scanning I use a Canon Canoscan 8600F scanner that can scan multiple photos at one time and put them each in a separate file. That's speeds up the scanning process considerably. I would imagine other brands of scanners would have similar features. The Canon also will scan 4 slides or a film strip and separate the images into separate files.
I'm not familiar with commercial scanning services. You can get an idea of price by Googling and see what you find. A lot depends on the amount of time you have to do the scanning. I'm retired so that's not a problem. If you have the time you might find that having them done commercially will cost several time more that the cost of a good scanner.
NOTE: If you're scanning black and white photos scan them as color because iPhoto doesn't play well with the grayscale file format.
TIP:
For insurance against the iPhoto database corruption that many users have experienced I recommend making a backup copy of the Library6.iPhoto database file and keep it current. If problems crop up where iPhoto suddenly can't see any photos or thinks there are no photos in the library, replacing the working Library6.iPhoto file with the backup will often get the library back. By keeping it current I mean backup after each import and/or any serious editing or work on books, slideshows, calendars, cards, etc. That insures that if a problem pops up and you do need to replace the database file, you'll retain all those efforts. It doesn't take long to make the backup and it's good insurance.
I've created an Automator workflow application (requires Tiger), iPhoto dB File Backup, that will copy the selected Library6.iPhoto file from your iPhoto Library folder to the Pictures folder, replacing any previous version of it. It's compatible with iPhoto 08 libraries and Leopard. iPhoto does not have to be closed to run the application, just idle. You can download it at Toad's Cellar. Be sure to read the Read Me pdf file.