I've seen this question a few times recently, so I wanted to put in my two cents. I did a similar post last year, but this one will be more specific and include ideas I've learned since then. What Montessori materials to buy is really a matter of taste, but these are some of my thoughts on the topic.
Practical life is allowing your children to participate in day to day life and to encourage independence. There's not much you need to buy here, unless you you want to get a set of child-sized table and chairs (Ikea usually has some nice stuff in that department) or a small broom or something. A sewing block and some cut-able fruits and vegetables are also fun tools for this area. They get a lot of use at our house.
Cylinder Blocks: Expensive, but hard to make, and most people don't have a set of brass weights sitting around. This is a tough one. I think they are not strictly necessary, but from what I've seen, most kids love them, and they are a great tool for learning to distinguish size and introducing Montessori. I understand they also go a long way, with various levels of challenge. I think this is probably a good place to start, especially with a two-year-old. Check e-bay for the best deals on these. Keep an eye out for Grandpa's Montessori.
Pink Tower, Brown Stairs and Red Rods: We bought these. I think out of all the tools, they are some of the most important, and when we priced out wood, we found it to be pretty much the same price to buy them as to make them. If you have someone around who is good at making things with wood (because these should be nice looking and fairly exact) then you may want to price the wood yourself and see. In the area we live in, there are fewer stores and less selection (with the closest big cities about 300 miles away), so the prices tend to be higher. I think the pink tower is especially good to have and can be found at several places in the $20-$25 range. On the other hand, The Wonder Years recommends natural instead of pink so that it can be knocked down without worries about chipping the paint, so that might be a reason to make them. I know one blogger who made her "red" rods from pvc. That's not as attractive, and they didn't get a lot of use, but I don't know of any homeschoolers who get much use out of their red rods anyway. For the rods, I think you might be just as well off going that route or just skipping the red rods and going straight to the number rods instead. This is one of those cases, I think, where in homeschooling you don't have to have everything you would have in a classroom.
Color Tablets: There are a million and one ways to make color tablets: markers, thread cards like Montessori used, jojo's files. I think any of them work just as well, though I am still tempted by the real thing from time to time. One note: Color box 1 is another thing I don't think is necessary in a homeschool setting. Just grab the primary colors from box 2.
Sound boxes: I don't know anyone who bought their sound boxes (although you can find a set at OrientalTrading). A lot of people use film tubes. Jojo used cardboard tubes. I used play-doh cans - not attractive, but Beeper uses them all the time; they're one of his favorite works. Same thing goes for smelling and tasting bottles - why buy the set when all it is is empty bottles?
Geometric solids: We love these. What you don't need, though, is one of the sets of really big, blue ones. If you want the specific shapes mentioned in Gettman and other albums, you can buy them here or here, although not all your prisms will match up, and in the second set you'd have to buy a wooden egg too. According to the Homfray videos, though, it doesn't really matter what shapes you have, especially on the preschool level. They were mostly just intended for the children to explore sensorially and maybe learn the names of the shapes. If you don't care exactly about the shapes, look at OrientalTrading or a teacher supply place. I'd love to get a set of platonic solids. If anyone comes across somewhere you can buy some, please let me know!
Touch boards: Make your own touch boards or fabric box. Here's why. Or you could just buy a nice set from here, made with textured paper instead of sandpaper. ;)
Constructive triangles: I've posted a couple of times about why I'm not impressed with these, and how you can meet most of the objectives with blocks or shape tiles. I was kind of surprised, but these have been one of my most popular downloads.
Binomial and Trinomial Cubes: I didn't understand how cool these were until I watched the Homfray videos about them. You can find a list of block sizes you need to make your own here. I think they would be fairly easy to make using three different sizes of square rod.
Stereognostic bag: Again, go to the Wonder Years or watch the Homfray video on this, because I think the Gettman book makes it sound a lot more complicated than it actually is, and this is something you can easily make out of anything.
Baric tablets: We bought some, because they are not very expensive, but we haven't gotten a lot of use out of them yet, so I can't say either way right now. I have seen suggested making baric cylinders using pennies or sand or flour in film cans. Remember on the Movable Alphabet when the children made their own set?
Insets: I think the plastic version are your best bet here. I wrote about that here. If you want to go really cheaply, get some stencils at the dollar store. Kids love tracing stencils. However, I think there are a couple of objectives ordinary stencils don't fulfill, and they don't lend themselves to design in the same way. It is my opinion, though, that the insets serve an important purpose and should not be skipped, so get something, even if it is just stencils.
Sandpaper letters: These are actually not as hard to make as you would think, and I recommend making them, so that you can use a softer sandpaper (400-600). Or, I like jojo's idea of making them with sticky-backed felt. I made mine on matte board, which I really like. A frame shop may be willing to give you scraps cut from the middle of the mattes, and they can be painted to match each other.
Movable alphabet: I think in a homeschool setting, the thing to do is buy two small movable alphabets in two colors (If I were to do it over again, I'd buy two of the yellow sets on clearance here and paint one set green). You can swap the vowel colors for early work, then use both alphabets for later phonogram work.
The rest of the language materials can be made to suit you own way of doing things.
Number rods: If you don't mind smaller rods, these can be made cheaply enough using square rod from the hardware store. They are kind of tricky to paint, though, especially if you want your sections exact.
Sandpaper numbers: See sandpaper letters.
Spindle box and cards and counters: I don't see any reason to buy either of these, as there are many ways to make them. If you are creative, you can probably come up with stuff that's more fun than the catalogue versions anyway. It can be useful to keep your eye open for small, fun, inexpensive objects that you can buy at least 55 of and keep on hand for counters.
The Bead Material: I actually had fun making this and was very pleased with the result. It can still be expensive, even to make (I think I spent about $75 total), but still much cheaper than buying it. I think it's worth it, but I know a lot of homeschoolers just opt for a cube/stick version from various companies.
Number cards: Not too expensive, so possibly worth just buying. We'll be making ours.
Teen and ten boards (seguin boards): Another materials that there are many ways to make. I've seen a lot of different versions on different blogs, the easiest being to just print numbers out on cardstock.
Hundred board: I think you can find this for under $20 from a couple of places, or you could buys some wooden tiles and write your own numbers on them. Koko's Mama used ceramic tiles.
Fraction circles: We like our plastic ones.
Multiplication and division boards: I bought some pegs and skittles and plan to make one board to use for both of these.
Stamp game: Another post to look for soon. I've just about gathered all the materials I need for this one. A lot of people just print them out. (Someone have a link to somewhere you can download that?)
This is an area I don't know as much about. I know some people make their own puzzles, but I think with the time it takes and the difficulty of it, it's probably worth it to just buy any puzzles you want. I've been seeing a lot of Melissa and Doug U.S. puzzles for really cheap lately on ebay. However, I would recommend making your own control maps to go with your puzzles. That's not hard, and I have heard that many companies' maps don't match their puzzles anyway.
You can see our land and water forms here. I think the homemade ones are nicer than plastic ones. I didn't used to think this was a very important material, but now that I understand Montessori better, I think it's my favorite culture material for preschoolers.
Most of the stuff we've purchased was from ebay. Instead of buying everything at once, I keep an eye out for good deals. You need to keep a close eye on shipping, though, if you do it that way. A lot of sellers on ebay don't really combine shipping, and it adds up fast. Shipping can make it worthwhile to just buy everything at once from a discount supplier. I have also wondered sometimes whether it wouldn't have been better to just buy those boxed sets of homeschooler grade materials. Check out the archives of my "saving money" label for more links to deals and ideas for making things. And, of course, The Ultimate Montessori Homemade Materials Collaboration is a great place to look at what other bloggers have made.