I have a PE-770 and have enjoyed using it. It uses PES format. If you want to do lettering other than what's built in, you might want to try Sew What Pro. With that software, you can use any TTF on your computer.
I did try my hand at digitizing a bit, using SEU (a Sierra product), which is free, but you have to be connected to the internet to use it. If you're satisfied with the on board designs, or those you can find online, you really don't need software, just a USB stick to transport the designs from your computer to the machine. I've also used a couple of design cards, but those are rather pricey.