Hello Apoorv,
The differences between the different "editions" of Visual Studio (VS) can indeed be very confusing, made even more so if you're comparing "versions" (VS 2008, 2010, 2012 etcetera), and picking the "right" Version/Edition really depends on how you intend to use it.
If you're just looking for ASP.NET (WebForms) coding, compiling and site publishing, WebMatrix might be the best choice for you. It's free, highly extensible and is pretty darned powerful for the awesome price of ZERO $.
If you're looking for something to allow you to do more complex debugging, or want to develop WinForms components, Windows services etcetera, you'll need VS. If you're planning on running your app against a SQL 2008 DB, my personal recommendation is to run VS 2008 or higher.
Many of the features contained in the various VS Editions (Professional, Ultimate) that sound like nice things to have are just that, and aren't really critical to how most people write systems outside of the enterprise environment. Take the same approach you would to purchasing an automobile or other "big ticket" item. Just as you would evaluate features like power windows, door locks and seat heaters in a car, evaluate the features in the editions of VS in the same way. Seat heaters might be a necessity for someone living where it often gets cold and icy, but are infrequently used by someone living in the tropics. Having the ability to work with TFS might be nice for someone working collaboratively with 5 or 6 other developers, but its power does little good for a 1-2 developer project.
If you're building from the ground up a good, well-thought and solid requirements document and technical spec's will give you the best idea of what you'll need in an IDE and what components you'll need to complete the project...and in their excitement to get things rolling, is one of the most COMMON things people DON'T do before starting a project.
Perhaps the best way to go is to start with "Free" and then as you begin your project...let your needs dictate whether or not you need to consider going to a more powerful (and costly) platform.
Hope this helps,
Chris