The kiddush cup is perhaps the most iconic piece of Judaica emblemizing the Jewish home. Not just a chachkeleh behind glass, it often is the centerpiece of the Shabbat table.
And its use extends beyond Shabbos. Kiddush cups are often used for Birkat HaMazon, Havdalah, on Yom Tov, during a bris and during a wedding.
What makes it a kiddush cup per se? Nothing really. It can be made of any type of material -- silver, silver plate, other metals such as aluminum, glass, crystal, porcelain or even wood. Assuming there are no significant cracks or chips around the rim, the only real requirement is that the volume of the cup is at least 86 cc.
Whether the Kiddush cup has a stem or not is really up to your own personal aesthetic proclivities. But from a practical viewpoint, many people have a custom of holding the Kiddush cup from the bottom, with their fingers pointed upward, so you find that to be a challenging balancing act, it will probably be easier without a stem.
Although traditionally sterling silver Kiddush cups have always been the norm, today aluminum, porcelain and crystal are quite common, and in fact, although it might appear a bit odd to some, in theory there's nothing wrong with using a regular wine glass.
So what's Kiddush all about?
Kiddush was devised by the Talmudic Sages as a formal declaration of sanctity, i.e. the sanctity of Shabbat or Yom Tov, or during a wedding ceremony when the bride (i.e. the marriage) is sanctified. In Exodus 20:8 we are told to “Remember the Shabbat day to sanctify it.” Notably this sanctification must be recited over a cup of wine (or grape juice).
The nuts and bolts of how to recite Kiddush
Kiddush actually takes two distinct forms, the nighttime Kiddush and the morning Kiddush. The Kiddush recited at night is more involved and more important, from a halachic standpoint. The morning Kiddush, termed Kiddusha Raba ("the Great Kiddush," although it's actually the lesser Kiddush) is also recited just before the Shabbat meal, but it often becomes a communal affair, since it can be done ahead of the meal, right after the morning synagogue service. Therefore if you hear, "There's going to be a Kiddush tomorrow," that means someone has arranged to host an event for the congregation where the morning Kiddush will be recited and refreshments will be served.
The night-time Kiddush is preceded by the blessing of the children and two songs, Shalom Aleichem and Eishet Chayil. After the challahs are covered and the Kiddush cup has been filled to the brim everyone stands (in most homes). Although some people refer to Kiddush as a prayer, it is actually comprised of verses from the beginning of Genesis, the blessing over the wine and a longer blessing which formally sanctifies the Sabbath Day.
The leader holds aloft a full cup of wine or grape juice, to sanctify the Sabbath by remembering that "in six days, God created the heaven and the earth -- and on Shabbat He rested." For the text and translation, go to this page.
The morning Kiddush is a simpler affair. Since the sanctity of the Sabbath has already been established, the third blessing is omitted. Typically recited sitting, it consists of just a few verses and the Borei Pri HaGafen blessing.