The inside of pencil is made of a graphite and clay mixture. The ratio of graphite to clay determines how hard the final result is. Pencils never contained lead. Graphite is dark and soft and leaves marks on paper - a lot like lead. When it was first discovered it was thought to be a type of lead. That is where that misconception comes from.
Pencils are rated on a range of 9B to 9H. 9B is the softest, leaving the darkest marks on the paper, 9H is the hardest, leaving barely any mark at all on the paper. In the middle is F and HB. (No.2 pencils are 2B)
"H Hard Range - the lead becomes harder as the H number increases and the harder the pencil, the fainter the lines that are produced with it. Hard pencils are best for fine details and techinical drawing.
F Medium range - this is sometimes indicated by HB as well as numbers of F.
B Soft range - the lead becomes softer as the B number increases. The higher the number, the darker the lines will be, and the more easily smudged. Softer, 4-6B pencils are used for larger quick sketches or figure studies. The softer the pencil, the faster it will wear down and the more it will need to be sharpened. Soft pencils can produce good results shading but will not hold a point for long."*
A good pencil set to start out with is one containing a range from 2H to 6B. (I own a set of pencils that has 4H to 8B, and I have never used 4H and barely used 8B).
Drawing pencils are avaliable at every art store and are fairly inexpensive.
*http://artcafe.net/studio/pencil.html | 
