Capos for guitars and banjos come in two main varieties: a bar with an elastic band and ones with some kind of clamping action. I always vote against the elastic band kind of capos. While they only cost $3, they are difficult to use and will often push your strings out of tune. Bottom-of-the-line clamping capos are available for $6-8, and you can get pretty good ones for $12. Dobro capos are a whole 'nother breed.
You may not need a capo if you always play by yourself and your voice matches the easy open keys you are familiar with. But if you want to sing in different keys such as Bb or B, then a capo is useful. If you want to play with any bluegrass musicians, a capo is pretty much mandatory. And if you want to just play with anyone you meet, a capo is often useful. The other person may have capo to match his or her singing voice or may be tuned strangely (many 12-string guitarists tune down to F or E) or may just play a song you know in a different key.
Caveat: Even with a capo, you still need to learn to play in other keys besides the one you chose to start with (usually G on the banjo and G,C, or D on the guitar). For one, you don't really want to capo way up-the-neck. Two, a capo generally loses some sound from your instrument.
A capo is tool, just like a banjo is a tool. You can't use it for everything, but for some things, nothing else will do.
Memorizing this scale is also the first step toward learning music theory.
The distance between any two notes is a "half-step" or a single fret on a stringed instrument.
Dropping a note one fret means you "flatten" it, so a B dropped down is Bb.
An A# and a Bb are the same note so there are only 13 distinct notes in the chromatic scale.
Stringed instrument players usually think of the in-between notes as sharps so you can simply memorize this scale:
That's really the only thing you need to memorize.
Of course, you can't merely slide up chords that have open strings unless you also fret those strings. "Closed" chords are those chords that have all the strings fretted and you can move them anyplace on the neck without worrying about open strings. They are often referred to as "chord forms."
If you put a capo on the 2d fret (actually placing it between the 1st and second frets about where your fingers would go if you were fretting the strings there), and then you played a G-chord, the true chord that sounds would be an A because you've moved all the notes up two frets (one whole step).
Playing a C-chord would sound a D. Playing a D-chord would sound an E. What you are doing is transposing on the fly.
When you put a capo on, every note and every chord is actually however many steps higher as the number of frets you've skipped with the capo. This can get real confusing. The best thing for beginners is to not think of what the "true" chord is, just play G, C and D (or D,G, and A or whatever) and don't worry about it to begin with.