Got a 120 Faber Castell's Polychromos set myself and I love it. It's rather easy to blend but not too soft (I'm not exactly a painting/smudging friendly person). I seem to have a bit of a problem to make certain colors really intensive but my works are usually a tad desaturated anyway so it doesn't bother me.
I've never tried Prismacolor pencils (they are not available where I live, but I'll order them one day), but as I know (and like most of the comments here say) they are considered as the ultimate. I use Koh-I-Noor color pencils (I have a 72 set), and I'm more than pleased. They are soft enough so you'll be able to control the shade, the variety is great, I love them a lot. A LOT!
I don't know the range of the prices in Australia, but if Prismacolors are too pricey for you - you can try these out.
As for mixing and blending - it's a lot like regular pencils. If you'll have good quality pencils you'll be able to change the shade by different pressure and by layering light layers of colors (using different type strokes).
Prismacolor pencils are standard for most artists, but the other brands listed can be equally good, it just depends on your preference. You will get 'wax bloom' with Prismas and other wax-based pencils, which is a waxy buildup that can dull the colors. The way to avoid this is to lightly wipe the finished painting with toilet paper or paper towel (until it has a slightly shiny surface when tilted) and then use fixative on the piece.
Personally I prefer to work on either dark or neutral colored paper (canson is a good brand with lots of colors) or to put down a base of watercolor first and block in the colors. That way you don't get a lot of white specks that are hard to fill in.
For blending, usually I lay down strokes and texture in a variety of colors, then use the lightest color I want to go over and blend them together. You can also use a blending stick or blending pencil. Honestly I'm not sure I can really describe a good way to learn colored pencil technique; you might try picking up some books and just experimenting.
I used to be scared using colors too but I tried it anyway. Prismacolor is a great choice but I'm still saving up for it. Currently, I'm using Faber-Castell Classic CP and Watercolor Pencils for practice. But I think it's up to you which one you're comfortable with. I can't give you enough advice because I'm still learning. But I'll share with you one of my favorite sites about using Colored pencils is: Moore's Art Gallery He'll tell you his experience with colored pencils.
Take some time to read it. I'm sure it will be a great help.
Hm I only just started using cp so definitely not an expert, but from YouTube videos and such: They will not smudge with a finger however most brands have some version of a colourles blender that helps to smooth out the strokes. There are different types, oil based or wax based. Also different colours have different colourfastness ratings, with regards to fading caran d'ache luminance are the best out there. The softnes of the led (and blendability) varies between brands. You can't properly mix the colours like you do with paint, hence try to get the biggest set you can. Paper matters as you work in layers and if it is to smooth you won't be able to put down as many layers as you need for a good result. A lot of people use turpentine to achieve a painting like look. Some prefer to use watercolour pencils for painting effect as you only need to use water with those, however the colourfastness is better in normal cp. I've seen a lot of works that use a combo of cp and watercolour pencils and I find that it looks really good together.
Finally I have a Lyra Rembrandt set which are oil based and are the cheaper ones from the professional ranges and really like them, just need to get used to a slightly different style of drawing than with graphite.
A colourles blender wich is technically a pencil [link] like this, but other brands do them. Well with oil pencils you don't get wax bloom and don't really need fixative unless you want to. With most wax pencils you need to use fixative. If you draw on unfinished wood oil pencils are really good for this. The lead oil pencils is a little harder so they don't break as easily. They handle differently e.g. You can apply heat to help blend wax pencils but not oil based ones. It comes down to personal preference. Most popular professional cp: Faber-castell polychromos are oil based Caran d'ache pablo are oil based Prismacolor are wax based Less popular professional cp: Caran d'ache luminance wax based (these are the most expensive pencils prob why not as widely used) Derwent coloursoft wax based Lyra Rembrandt polycolor oil based