I'm using a Singstar microphone.
It's pretty bad, I'd say- sub-decent quality and a horrible amount of background hiss and crud that is the microphone fault. I will admit that I don't really have good conditions for recording anyway, but I'm working on that, and so in my opinion, the mic right now is the biggest problem I have to worry about at the moment.

So to sum it up, would I actully be better off upgrading to a BETTER mic to record vocals (because I'll be need that a TON in the VERY NEAR future) or getting an interface and trying to use this POC*?

*piece of crap

well, you really need to upgrade BOTH mic and soundcard.

but if I had to pick ONE I'd upgrade the MIC first.  however, doing that you're likely going to actually cost yourself more in the future than if you upgraded both at the same time.

if you can only afford a MIC and not a soundcard at the same time, then get a shure SM58 (since you're doing vocals) and a cable for it, and an adapter for 1/8" to go into your onboard soundcard.

the SM-58 is a dynamic mic and does not require phantom power.  if you use your onboard soundcard you will not have phantom power available, so you MUST get a dynamic mic.  there are some cheaper dynamic mics than the SM-58, but you'd have to get something similar.

all the hiss and crud you hear in the mic may actually be the sound card you are currently using. 

I would still say get a nice interface first and try the existing mic with it and see if it isn't better.   If you get a better mic first, you are still having to jack leg it through the card you currently use..... 

Some folks here have purchased a condensor mic for about $60 that they say gets really nice results....I do not recall the brand or model. 

 If you are recording acoustic instruments you almost gotta have a condensor to do it right. Plus, a condensor is magnificent on vocals and can be used for many other things as well.