We are doing our research for a web hosting site to set up a site that will be selling pet products and also have information for our pet store. We are new to building a site, etc.
Question 1: Is there a difference between a web builder site vs a web hosting site w/ web building tools?
#2: Is a better to buy web design software, like frontpage, and up load it to a site or pay extra to use programs the site might offer?
#3: Would it be better to use a dedicated server or a shared server? We think that we will not have to high of traffic.
We did a trial with startlogic and they had really horrible templates. Any suggestions?

In order to create a web site and put it on the internet, you must have hosting. Where the difference lies is whether the host provides accounts that are based on a wysiwyg (what you see is what you get) editor or simply provides CMS's (content management system) scripts that may be auto-installed and assist you with the adding content to your site. Online wysiwyg editors are much like an online version Frontpage.
It depends. You might consider using free programs to start, so you have an opportunity to learn what you may need or not need in that type of software. Try Evrsoft First Page and Seamonkey are two free programs to try.

If you have little experience and do not believe that you'll have high traffic, your better off going with a shared server and upgrade to a VPS or dedicated as necessary.

Even if you find a template that you like, unless you have it designed, the look won't be unique to your site. In fact, a thousand sites may be using the same template. If you currently have a logo and have an idea what you want the site to look like, contracting with a designer will probably be relatively inexpensive.

Edit: There are many shopping cart type scripts available, both free and paid, such as OSCommerce, that can be installed automatically by many hosting account control panels. There are many themes available and it's not too difficult to change the logo and the color scheme.

But he must be an experienced enough to do that.

If you have the capital to do it, your best bet would be to hire a designer to create your website. If you don't have any experience in designing your own site, the designer could save you tons in headaches if nothing else. Or you could purchase a template that you like which may be less expensive than a full-fledged website. You may be able to find someone who can tweak the template to be unique for just a little expense.

Try the html or flash website templates at Host Gator. I use them and they are excellent. There are a number of categories where you could go and select the pet category.

For #1 A website builder or web hosting site with web building tools all aim at helping you get your website up as easily as possible. It is more like a Wizard that helps you design your website.

For #2 If you would like to tinker more with your website you could use web design software like front page or dream weaver or Kompozer. I actually use Kompozer. It is really simple and free to use. Use any of these and edit your preferred template that you have downloaded and upload using an ftp program which you can locate if you google "free ftp program".

For #3 you can get an ecommerce site with shared hosting. So I would advise that you start with shared hosting and when the demand grows and traffic increases, you could upgrade.

Thanks everyone. I have a tiny bit of website design experience. I have 1 site I set up through Concentric when it used to be MSN small business. I used their templates and moved things around easily then loaded a bunch of photos. I'm not to happy with Concentric though.

We can't afford a web designer and would like to learn ourselves anyway. I'll check out kompozer.
We are leaning towards either inmotion, hostmoster, hostgator or downtownhost

You might also want to look at ExpressionEngine. They have a free version that will allow you to install it, play around with the template system, and put up a basic site with some fairly good, solid features (easy to maintain, customizable templates, can export templates to DreamWeaver, easy-to-integrate site search).

Then, if you decide that you want to invest in the software, you buy the commercial package, follow their easy-to-understand instructions for upgrading to the paid version, and start playing with the new features.

If you're new to web hosting, one bit of advice: always make backups of your own. Always. Always. Always. You might not need to use them for five years...but if anything should happen, if you should find yourself with a host that has a bad server day/week/month, you're safe.

Like many of the folks in this thread, I would also advise: start with a small hosting plan, then increase as necessary. Upgrading is relatively simple, once you see the need. Paying for resources that you end up not using, though? Why do that?

Whichever host you decide on make sure they have a 10 or 20 day refund guarantee.

That way if service or support is inadequate you can request a refund.

Some nice free templates can be found at:

http://www.freecsstemplates.org/
http://www.oswd.org/

However, given that you'll be selling stuff, and if you'll have a wide array of products, you should definitely look into using a shopping cart, to keep things nicely ordered. OScommerce and Zencart are free software.

Hosting? Definitely start with shared hosting. Success doesn't come over night.