Okay, there's a few different facets that you're looking at here. The first is the machine. Windows Laptops are the most common way to do hosting although I've seen a guy on eBay making systems, and I could make one myself, that is rack mount. That way you just put the baby in your rack and you're good to go, just have to add a monitor, keyboard, and a trackball.
If you are going to use a laptop I believe an absolute must have is a quality external sound card. The internal sound on most laptops is going to be noisy because of all the interference. There's a number of USB and Firewire solutions out there (M-Audio being my preference but there's several).
Now, if you're crazy like me you can go the Mac route, I'm just a Mac guy (after decades as a Windows and PC guy, going back to DOS). I started with a PowerBook and have since switched to an iMac G5 for my hosting. Not as portable as the PowerBook but more powerful and gives me a lot of screen real estate that I frequently need.
Now, programs. I've used Sax n Dotty's, it's good at what it does for its price. I think they've been talking about a new version for like 4 months now and haven't seen it (though I haven't stopped over lately). PCDJ was also mentioned and has a KJ plugin. The problem with some of these more complicated apps is they can sure bog down a laptop. Sax n Dotty's is pretty forgiving with system resources and is not a resource hog. I've tried using some of the other hosters and they most definitely are. You can't have your audio dropping because your system is being taxed with searches so keep that in mind when picking a machine and a program. For Mac you have essentially one choice, kTunes.
Next step is ripping your software. I can't say this enough -- buy a Plextor. Plextor just has CDG support down, if you're having problems with artifacts, ripping speeds, etc., etc. most of them can be solved with a decent Plextor drive. I've primarily used Audiograbber because it's free and lets me tweak the ripping a bit more (I insist on 160 sample rate). I have Audiograbber rip to MP3 and CDG files and then manually zip them, there are other programs (MP3+G Toolz) that will do the whole process for you if you so desire.
Finally, is storage. Keep in mind, this external drive is going to be on the road with you, it has to be tough. I think most of the external drives out there ARE NOT designed to be tough so I recommend buying a tough enclosure and the hard drive separately. Here again, I'm a firewire guy, I know USB 2.0 claims to be faster but I haven't seen it, Firewire 400 is still the goods for me and there are a number of enclosure options out there.
Finally, some companies don't want you doing this, period, even if you own the software and just have the one copy you're hosting from -- Sound Choice and Sunfly come to mind. In fact, some Chartbuster has an interesting bug with their 15th track that you may need to work around.
Once you go computer hosting you'll never go back. Rotation management, searching, consistent quality of your software -- these are the main advantages of going computer based, there are many more and increasing by the day as the software is developed more.
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Hello, I am a Karaoke DJ and have been for a few years i have recently been djing and doing more karaoke shows i use my cds and cdgs, mackie mixer, crown power amp, cerwin vega speakers and a tripple tray player. I was interested in getting into the laptop karaoke system i would like some imput on where would be a good place to start and if there are any good programs out there i could buy for a laptop to kj or dj? im tired of bringing all my cds with me to every gig and laptop seems like an easier way! Some one help please! 
! ya got me on that one, buddy.