Subversion version control... can I use it?

Hi, I'm slightly confused on how subversion works and installs etc,

My situation is as follows....

I'm working on a web startup, there are now 2 of us on the team and so I think it's appropriate we stop having to ask each other whether we can use "this include" or "that class" as we work.

So I heard about this subversion thing.

At the moment, I run XAMP on my Windows XP machine and we both use Dreamweaver as file manager. (he connects to my htdocs folder via the network).

We upload to our live site (linux deddi) via dreamweaver, but the internet in our office is often un-workably slow, so we try do everything we can on localhost.

We don't use dreamweaver checking-in and out because of our internet speed.

So how could subversion fit into my situation?

Does it save the extra data on my localhost or my webserver?

What file management software should I be using rather than dreamweaver?

Any help appreciated.... I just dont get it!

Setup the Subversion server on a local system accessible by all members of the team.
Use TortoiseSVN within the XP Shell to manage checkins/checkouts.
Free online book about Subversion
Subversion FAQ