What is exactly a bug tracking system? For two students, how much time would it take to develop one and what kind of money do we have to put into it? It is a solution for exactly what kind of a problem? In other words, how does it help the companies? A bug tracking system is what teams use to keep track of reported bugs, who's assigned to fixing them, and when and what was done to fix the bug. If it's just two of you, you could probably...
just track the bugs in a word processing document. Where the project's daily build is the heartbeat, the bug tracking system is the life blood. It tells you where you are at, and what still needs to be done on the project to keep it in a shippable state. It's probably the most important datastore on the project and in some cases, it's more important than the source code. A properly run bug tracking system will tell you exactly the quality and how close to on time you will be.
For more information on the Zen of using bug tracking systems, check out a fantastic book by my old boss, Ed Sullivan, Under Pressure, On Time. In there, you'll see how we used bug tracking systems at NuMega and how they helped us shipped on time. I do have to mention that the guy who wrote the forward is very good looking (smile!).
Since you mentioned you are working on a two-developer project, you might not need a full blown bug tracking system. You could probably get by with keeping track of everything in a word processing document if it stays just the two of you. However, if your project will grow to more people, you'll want to look at a real system. There are numerous commercial applications, but if money is an issue, there are numerous free systems floating around on the Internet.
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