LOL Lisa! In my opinion laundry just sucks. <img src="/images/graemlins/tongue.gif" alt="" /> But, it's one of those annoying jobs that must be done.
Basically the different cycles are for different fabrics. More delicate fabrics don't like the normal wash cycle because it's too much agitation. It pulls the weaving to harshly. Check the labels of your garments to find out what the manufacturer recommends.
As for the length of the cycle that should really be determined by the dirtiness of your clothes. If they are really dirty (like mine usually are) go for the longest cycle. If they are heavily soiled you can safely go with a shorter cycle. Again avoiding overagitation is a good thing.
Now your sheets and towels. It's really a better idea to wash them seperately from your clothing. With sheets your clothes tend to get wrapped up in a ball with the sheets and that really limits the amount of cleaning the machine can do on the clothing. Towels I always wash in hot with a touch of color safe bleach. I have kids so I feel like the towels are really dirty (I usually find them on the floor after they've been walked on). <img src="/images/graemlins/wink.gif" alt="" /> For a one or two person household, warm would probably work as well.
Another reason to consider washing your sheets and towels seperately is because of the fabric. Sheets and towels are usually made of heavier fabrics than clothing. During agitation if they don't get all balled up, the heavier fabrics tend to put added stress on the less heavy fabrics.
I wash my dark clothes seperately in cold water too. Warmer water can lead to fading. I usually wash all the jeans in one load seperately because of the weight of the fabric. If you have something that has a stain and needs a warmer temp, wash it by itself in the smallest cycle available and in the temp that works for the particular stain. Different stains take different treatments. If you're not sure how to treat a stain try something like Tide: Stain Care Guide
The better you treat your clothes in the laundry the better they'll look and the longer they'll last.
Hope this made sense and helped. <img src="/images/graemlins/smile.gif" alt="" />