Anyway, you're right about bikes having changed in the past ten years. If you haven't been in a bike shop, in fact, it'll feel a bit like being Rip Van Winkle.
You don't neednor do you really wanta mountain bike. Their knobby tires, heavy suspensions, and stiff frames don't really lend themselves to comfortable commuting or errand-running. So one happy development in recent years is a plethora of bikes purpose-built for city riding. Bianchi's Boardwalk ($500; www.bianchiusa.com), for instance, has the upright ride position of a mountain bike and fairly low gearing, but its rigid frame and smooth tires are better suited for squirting around town. You could rig this bike with a rear luggage rack and panniers for hauling groceries, a change of clothes, that sort of thing. Another very interesting bike is Trek's new Soho ($1,000; www.trekbikes.com). It's super sporty-looking, with racy Bontrager wheels and a titanium-gray paint job. Most interesting of all, it has a single speed on the crank (where the pedals are) and a cassette on the back wheel. That means it's very much suited for flat terrain, and the single speed on the crank saves weight and increases simplicity.
An alternative is to go with a more traditional road-looking bike, but one that's meant for touring and city riding. Cannondale's T800 ($1,200; www.cannondale.com) is an excellent example of such a bikean aluminum-frame tourist with lots of gears for easy pedaling and a nice, upright seating position for comfort (it has road-style "drop" bars, but they're on a stem that's angled up so you aren't all hunched over). Comes standard with a rear rack so it's ready to be loaded and go. Great bike for commuting, fun weekend rides, touring, and more.
So take a look at those bikes and any similar styles your shop might suggest. And have fun riding again! I'm sure you'll enjoy beating the prices at the pump, but any of the above suggestions will give you years of pain-free, good-vibe commuting.
For more of the bike world's best rigs, check out Outside's 2005 Buyer's Guide .