Best Setup for Database Cluster
Failover is easy to do. That just requires shared storage, and a couple of servers.

SQL Server doesn't support scale out to multiple nodes.  However a properly designed database with only a couple of thousand users should be able to run on a dual chip server pretty easily.  My companies systems support about 35k transactions per second on a quad chip server (with 6 cores per chip).

Like any database server you'll want to use multiple LUNs for each part of the system.  1 for data, 1 for indexes, 1 for transaction logs, one for tempdb.

If you can't afford a SAN (you'll be looking at a six figure purchase for the SAN alone) then you should look at database mirroring instead.  This when used with a witness server can give you automatic failover in the event of a failure, and doesn't require shared storage.  The different volumes for storage should still be used.

Before you can design your high availability solution (clustering, mirroring, log shipping, etc) you need to figure out what you are trying to protect against.  How much data are you willing to loose?  How long can you afford to be down during failover?