One Site, One Template, Many Blogs, Any Ideas?

From what I see of WordPress, I am pretty sure that I am going to stick around and use it for some time. It has proven to be the best tool for some sites. However, I need to build a specific site and I am a bit stumped. It seems to me that other people will have a simple solution. So, I am looking for some advice.

What I need to do is create a site that has a home page that links to multiple blogs. Basically, you can imagine it as being that there is a business site that has a blog for each department, eg “Manufacturing”, “Marketing”, “Development” etc. At the moment there are 4 blogs but I envisage that this could increase. Each blog is VERY similar but they will want their own banner image and “About” pages.

If I were not using WordPress I would give each department a different template but I would like to use WordPress for this one and am stuck.

Do I need to create a static home page and then a different WordPress install for each department? (Not attractive).

Do I create categories for each department and then post articles to a category and then try to capture the category with some type of "If...Then" code to present the appropriate banner etc on the fly.

Do I look for a template (I am pretty happy to buy a template). If so, what do I look for? The range of templates is a bit bewildering to say the least.

Any Ideas on where I should start?