Here is a tutorial I found that talks about .htaccess:
Are you sure you copied the code I gave correctly? It sounds like you missed something... post lines 1-13 of that file here and I can try to spot the problem.
3) mod-rewrite is probably better, but it is 6 of one and half a dozen of the other. It is worth investigating the mod-rewrite concept, so maybe number 1 is worth doing for the experience alone. 2 is probably easier, so really it is up to you.