For recording I would always use an external mic (mixed with a touch of pickup too sometimes).
The acoustic guitar is designed to push air out of the soundhole - in front of the guitar is where the "true" sound is. A mic will hear this where as pickup systems just hear a part of that sound.
But if you're playing live an external mic pins you to the spot - if you move at all the volume will change - that's where you need a pickup.
There are so many systems out there but your basic choices are:
Soundhole magnetic pickup
Stick on bridge plate pickup (also piezo)
There are a huge number of pickups out there with new ones coming on the market all the time.
My favorite system is the LR Baggs Anthem. It combines an undersaddle piezo with an internal mic.
It's not cheap but fore me it's the best.
The "heart" of this system is this rather clever little internal mic.
Here's a link to the LR Baggs site for some more info: http://www.lrbaggs.com/anthem/#details
In my experience internal mics just cause feedback but this one is different, it brings out the character of the guitar without causing problems.
The rest of the system is all well designed with simple, well labeled plug ins.
Everything attaches to the inside of the guitar using double sided tape so I don't have to make too many holes.
The eq has simple, understated controls.
The battery lives in a pouch which velcros in. It's usually attached to the neck block inside the guitar.
It uses the standard endpin jack.
As most of the parts are attached with double sided tape the first thing I do is clean the areas inside the guitar the tape needs to stick to.
I give these areas a very light sand, clean the dust off using lighter fluid on a rag and seal them with a thin mix of shellac.
While the shellac is drying I get on to the jack socket mounting.
Guitar endpins usually come out quite easily though they sometimes need a bit of encouragement with pliers.
This one was easy.
The hole left is too small for the endpin jack - it needs to be 1/2" diam. This is the only visible hole made in the guitar.
I put masking tape over the hole to reduce the chance of the finish chipping.
I drill the first hole using a drill bit that one size larger than the existing hole then keep drilling with larger bits until I'm at 1/2". This is not the quickest way of doing it but it's the safest.
The fatter threaded part of the jack goes through the hole I've drilled. the length of that part can be adjusted with the nut - endblocks are not a standard size.
It's not always easy getting the jack in - I can just reach on most guitars. Sometimes I need to feed in in with a wire.
Then it's just a case of tightening up the nut.
The Anthem system combines an internal microphone with an undersaddle piezo pickup.
The pickup sits in the bridge saddle slot underneath the saddle. I need to measure the thickness of this pickup and remove the same thickness of material off the bottom of the bridge saddle. If I don't do this I'll be giving the guitar back to the customer with a higher action.
I mark the saddle using a blade.
I must keep the bottom of the saddle exactly flat and square - any deviation from 'true' and the pickup response will be uneven across the strings.
I use my disc sander for this - taking care not to remove skin from my fingertips.
When I'm happy with the sanding I lightly 'soften' the edges of the saddle using a blade. I only take a tiny bit off just to help it sit in the slot and focus the downward pressure onto the pickup.
You can just see in in this picture.
This pickup requires an angled hole for the wire.
I round off the corner of the hole just in case there's a burr. Undersaddle pickups are very sensitive to any uneven pressure along their length - I don't take any chances.
The pickup fits in the slot
The saddle fits on top of the pickup
I hold the saddle in with a piece of tape until the strings go on. I don't want any dirt getting in there - those pickups are sensitive (did I mention that?).
The microphone mounts to the bridge plate roughly under the saddle.
Before the final fitting I plug it all in and test everything works
The kit comes with clips to keep the internal wiring from rattling about. It's quite common for guitar to come into my workshop with mysterious rattles that turn out to be loose wires vibrating in sympathy.
I fit the control plate to just inside the soundhole - neat eh.
I'm happy it all works and nothing has to come back out so I tighten up the jack socket.
Before fitting the strap hook I protect it with masking tape
I vac any dust out of the guitar give her a fresh set of strings and we're ready to gig.
If you're in New Zealand (and why would you be anywhere else) you can buy an LRBaggs Anthem from NZ Rockshops or through me