Analog in itself should not be a deal-sealer... more important is working with an engineer who knows where you're coming from, and where you want to go!
Personally I wouldn't do business with an engineer who doesn't know how to (or just won't) record live... bleed should not be an issue if everything is set up right... remember that amps can be physically isolated to reduce bleed. I have a small (as in XS!) studio myself and am constantly amazed by the lack of bleed when playing back live recordings at the end of a session... As a rule, I never let the drummer play solo... even if (for whatever reason) he's just accompanied by a single guitar, bass, or even vocal.
Lizardmen has a lot of good pointers, but even if "playing for the song" is essential, I would still focus on getting a great drum sound, because this is the one "instrument" you will not be able to overdub!.. Make sure your drummer has his drums tuned, and beware of crappy cymbals (in fact, any equipment and/or instrument issues your rehearsal room might "mask", will often be mercilessly exposed in a recording session!.. sometimes it can actually be a good idea to use on-site equipment that the engineer is familiar with... and if the studio has nothing of use, you might just be in the wrong place anyway)!!
I usually have the drummer in for a soundcheck the day before a session, or at least arrive a few hours before the bassplayer, then have the guitar/guitarslingers 'round for amp-tweaking, and finally the singer... having everyone arrive at the same time is definately not a concentration-enhancer.
All the best!
