An absolute must is this book by Rubini. (available both as a hardcopy or a free soft copy)
He gives implementations of several dummy drivers that don't require that you have any hardware other than your pc. So for getting started in kernel development it's the easiest way to go.
As for doing embedded work I would recommend purchasing one of the numerous SBC (single board computers) that are out there. There are a number of these that are based on x86 processors, usually with PC/104 interfaces (electrically PC/104 is identical to the ISA bus standard, but based on stackable connectors rather than edge connectors - very easy to interface custom hardware to)
They usually have vga connectors that make it easier to do debugging.
