I'm often asked by visitors to my site, what's the difference between and family tree project and a family history project? Personally, I like doing the later much more. While they may sound like interchangeable terms, the two are quite different; requiring different resources and approaches.
A family tree project focuses on names, dates and relationships. Using the metaphor of a tree, you compile links between individuals based on their bloodline (e.g. mother, father, etc). It's an easy process to start -- just sit down with your parents and start asking questions (e.g. "Who was your mother?")
Genealogists build their trees many generations, and to do so require older resources. Many researchers can quickly trace their roots back three levels (you parents, grandparents and great-grandparents), and for most this will get you back to somewhere between 1890 and 1910. If you get stuck, the U.S. Census is a great tool -- 1930 and 1920 are fully-indexed at Ancestry.com and with a few searches you can see who was living where and with whom.
After that it becomes a much more challenging project. As you work back century by century, the resources become more scarce and the effort required gets bigger.
This is my favorite type of project. It focuses on your direct ancestors (for which you need the basic information: names, dates, etc), but rather than just typing them into a software package (FREEBIE: Ancestry Family Tree) or writing them on a nice chart, you gather details about their lives.
These details then begin to intertwine as the stories of one generation blend into the next (which makes sense since when your parents were born, your grandparents would have stories about them).
Family historians tend to focus on three or four generations, which over time tends to lead further back, but the primary goal is to get as much information about the direct ancestors. Often, historical newspapers and local histories are the best resources, although land and probate records have a certain richness contained within them as well.
Interviewing is essential, but don't just ask about birth and death information. Find out where your relatives went to school, where they worked and lived. Two summers ago, I dragged my wife all over New Jersey to look at the different homes my great-grandparents lived in. It's a lot of fun to look at a home and imagine what it was like back when they were living there. Oh, remember to bring a camera!
Pictures are also important for family histories. Putting a face to a name is a key objective for the historian. Do you look like your ancestors? Is there one that you resemble more than others?
Absolutely not, you can actually work on both types of projects simultaneously. They're truly complementary. And both are tons of fun!
See also Accelerating Your Research Project