What to do about water?

I have city water and actually like the way it tastes. Is it ok to use water straight out of the tap or should I get some type of filter?

Go for the tap water. If it taste good you should be fine.

Make beer out of it......................................No, just kidding, all grain or extract?

All grain

As long as they aren't using chlorimine (a chlorine derivitive that does NOT boil off) you are fine.

Ask for a water report from your utility. Then google brewing water and research how water effects brewing. Certain waters are best for dark beers and some are great for light SRM beers. I know alkaline water will require some acidity in order to lower the PH enough for mashing without getting astringent grain tastes, etc. My water here is like that. (Darker grains are more acidic).

Hardness, etc also influence how hops and malt taste and affects mouthfeel.