What type of grout to use?

I want to replace the old, worn-out formica counter top in my kitchen with a tile counter top similar to what my house had originally (built in 1900). My question is whether to use sanded or unsanded grout. I'm thinking unsanded with a good grout sealer. Is this correct? Also, what type of tile would be best? I've thought about using subway tile or the small hex tiles that come on a mesh backing.