The answer depends on the exact conditions of your well water. There is no RUST in there but rather iron and that can be of two types.

A softener will remove iron up to a certain point and beyond that you need a separate iron filter before the softener. You can use a softener if you use potassium chloride (KCl) for regeneration instead of sodium chloride (NaCl) and there will be no sodium ions exchanged. See how easy that was? If you have high hardness then your TDS will go up and an RO may also be advised.

Ok, water softener 101 ...

Get a water test from an independent lab. An independent lab has no agenda and won't be trying to sell you water treatment equipment. Go to http://www.epa.gov/safewater/labs/index.html to locate a certified lab near you. This is a MUST DO because without it everything is a guess. A quickie water test from Sears or a water softener company won't be as accurate (and possibly not as competent) as from a certified independent lab.

Hit the Yellow Pages and call at least three local water treatment pros. Make sure you call at least one of the big dogs like Kinetico or Culligan for comparison and at least a couple independent pros. DON'T TELL THEM YOU HAD YOUR WATER TESTED.

Give each an opportunity to offer suggestions and provide you with a quote to meet your water treatment needs. IGNORE ANY THAT DON'T TEST YOUR WATER THEMSELVES as they can't speak intelligently to water treatment without knowing what needs to be treated.

Ask lots of questions. Softening the entire house or just the water heater (bad idea)? Warranty, parts & labor or just parts, how long and on exactly what? Install, permits required, licensed plumber? Routine maintenance and costs? Do they stock parts? Response time for emergency (water leak) calls? If they don't explain things to your satisfaction that is a good indicator of how you'll be treated after the sale.

After they've gone use your water test to compare with theirs. Are all your treatment needs being addressed?

Ask your neighbors if they have any water treatment experience. They might tell you who's good or who to avoid.

Come back here and post the specific recommendations and hardware components with the costs and we'll give you our opinions.

Will do! Thanks very much for the reply, I'll come back when the results are in.