Like I mentioned, I have a rather big rubbermaid container for our worm bin. It works fine. I've seen vermicomposting bins on the internet for $120! I think anything with a lid will work fine.
We store ours under our kitchen table (it's a rectangular table pushed against the wall). My friend stores hers in her laundry room.
As far as the types of worms to use, I am not an expert but I believe the best kinds of worms to use are 'red wigglers' because they eat the most and reproduce the fastest. Earthworms aren't good for indoor worm bins, they don't eat the right kind of stuff and also don't eat fast enough. Red wigglers will eat half their weight in kitchen waste a day. If you overfeed it's not a big deal but leads to mold blooms because the food is sitting in there too long. (Mold blooms don't require anything apart from waiting it out, they go away within a day or two.)
(No, I don't drill holes in my bucket. I've read you should, but it hasn't been necessary, so I haven't.)
Suwanee> Red wigglers don't live up north because they can't survive the winters here. Or so I was told. So, if you are up north and want an outdoor composting bin, don't use red wigglers. Dh told me they are abundant down south.
The cheapest, easiest set up for outside is to just dig a small hole and throw your kitchen waste in it. Cover with soil and wet down. Each day when you take your kitchen scraps out (no greasy foods, no cooked foods, no meat or dairy), turn it and dampen it if it looks dry. The worms in the soil will find it and do their thing, and you won't have to worry about the heat or the cold killing them.