Regarding the photographing of your artwork - I have had my best results using the methods described in this thread:
http://forum.portraitartist.com/showthread.php?t=6773
White balance is the bugaboo for digital cameras. This is typically the reason our colors don't interpret well in our paintings. I think we are much more sensitive to the colors in our paintings than we are on the subjects we photograph. It was no different with film except we had no way of controlling the temperature of light except with a broad swipe as we purchased the roll. Having done that we were locked in for the 24, 36 images. The digital SLR gives you the means to custom fit the light temperature per image. With so much flexibility it can be bothersome figuring out just what the conditions are and then finding and making the proper adjustment.
Regarding lenses - The usual advice you get is to buy the most expensive lens you can afford. Lenses are mostly priced on how well they gather light, or how "fast" the lens. Personally, I would love to have the most expensive lens out there, but realistically I think you can do the job with something much more modest. I have been pleased with the lens that came on my D70, and my old lens that I used on my Nikon film camera stills serves me well and it's not expensive by any means.
Your concerns about small rooms is real. I find that I can do all the work that's presented to me with two lenses: my lens which is a similar zoom as you describe, 18-55mm (which has a 1.5 multiplier in the 35mm nomenclature), and a more telephoto 70-210mm that I use more in the out of doors. The shorter lens is a necessity in the small confined spaces you describe. In a twelve foot room you would be hard pressed to get anything but a head and shoulder with the short end of the 70-210 (70 becoming 105). You should be fine with the lens you describe in confined spaces as it relates to focal length. If as you compose your image you find that your focal length has dropped below 33mm (50mm after the multiplier) then you're bumping on the edge of distortion and you've got to be aware of how you've composed your subject. This 33mm is however a pretty wide angle and should accommodate the smaller spaces.
Even though it would be nice to have an expensive, fast lens I have managed for many years with what could only be described as mediocre equipment. We must do the best we can with what we can afford. It would be no trouble finding a nice $1000-1500 lens for your Nikon. I've never had anything close to that. My advice, unless you've got the money, is to squeeze all you can out of your lens by understanding just what their capabilities and limitations are. I can imagine that it would be a real drag having purchased all the finest equipment and then realizing that your pictures are still lousy. At this point I still have my equipment to blame.
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