We used covers and flat diapers very much the same as my parents used on us 50 years ago. I think they're called trifolds? I got the cheapest covers I could find on the internet, which were Proraps. They worked fantastic. Honestly, our cloth diapers leaked less than the disposables (we used those on trips), especially with the liquid poops of little babies. Came in different sizes and we worked our way up. We got diapers from this place:
http://www.greenmountaindiapers.com
They also sent us a great informational handout with the diapers. There are cheaper diapers out there, but these were very nice and soft, and our kiddos both had sensitive skin.
We did not use a fancy diaper pail. We used a little plastic trash can with a hinged lid from Home Depot or Target, and lined it with cloth sacks that we washed with the diapers. We wiped out the trash can with vinegar pretty often, but that was easy. It never got as gross as you'd suspect it might have - only if there was too much liquid left for too long. The trash can joined us in other roles after our kids left diapers - it is unscathed by its experience. The key was the cloth sacks, which were technically very thin, low-quality laundry bags, don't remember where from.
Washing them was the biggest challenge. Our daughter was sensitive to a lot of laundry products. We ended up using something recommended by greenmountaindiapers, Charlie's Soap, which we have stuck with for environmental reasons. It doesn't have reflective oils and particles to make your clothes appear "brighter," but we're happy about that. We always scraped very clean, then washed with Charlie's and non-Chlorine bleach. We have a high-efficiency front loader so the environmental tradeoff of water use vs. landfill seemed good. The financial benefit was tremendous.
If you have the opportunity, pick up some used ones and give them a try before going all-in on a system. We had a diaper service in town when our first child was born, and that was our introduction to both Proraps and the process of changing cloth diapers with covers without committing to buying the supplies.
