What is a pull up/down?
A pull up resistor is a resistor, usually of a high value (anywhere from approximately 1K to 100K with 10K being pretty common but it depends on the situation) between part of the circuit and the high rail, usually 5V for Arduino projects, but it could be 3.3V for the low power systems. A pull down resistor is the same but to the low rail - 0V. The point is to pull that part of the circuit to either of the voltages when the circuit goes into the high impedance state of neither voltage being connected. If that part of the circuit is never in high impedance or the circuit consuming the signal can't misbehave because of high impedance (like an LED) you will never need a pull up or a pull down.
Wikipedia says it even better than I do, and with diagrams:http://en.wikipedia.org/wiki/Pull-up_resistor