Well, Kevin, herbs and spices are the basic flavor building blocks of cooking. So it's only natural that people be interested in them.
Paprika is just dried, ground chilies. The specific peppers used determine flavor and heat. In Hungary there are, literally, dozens of paprikas, ranging from sweet to atomic.
The difference between paprika and chili powder is that most chili powders are blends, rather than being made from a single chili variety. For example, McCormick's chili powder consists of "chili peppers, spices, salt, silicon dioxide (added to make free flowing) and garlic."
Unfortunately, unless you grow your own, it's difficult to find paprika in the U.S. in any but ground form. Just try and get the freshest you can find.
Evidently, the masala recipe you have specifies powdered spices. Not a surprise. Many recipes do, because for most people, that's how they buy their spices. However, if you want a nice garam masala (which is the spice mixture for many Indian dishes), a good starting point is the one given by Suvir Saran in his book, American Masala. Here it is:
Garam Masala
1 tbls dried miniature rosebuds (optional)
A 1-inch piece cinnamon stick, broken into pieces
2 bay leaves
1/4 cup cumin seeds
1/3 cup coriander seeds
1 tbls green cardamom pods
1 tbls whole black peppercorns
2 tsp whole cloves
1 dried red chile
1/4 tsp fresly grated nutmeg
1/8 tsp ground mace
If the roses have stems, break them off and discard. Heat the roses with the cinnamon, bay leaves, cumin seeds, coriander seeds, cardamom pods, whole peppercorns, cloves, and chile in a medium skillet over medium-high heat, stirring often, until the cumin becomes brown, 2 1/2-3 minutes. Transfer to a spice grinder or coffee mill, add the nutmeg and mace, and grind until powder fine. Store in an airtight container for up to 4 months.
Dried miniature rosebuds are difficult to find. But they do lend a pleasing, floral note to the mix. If not, leave them out.
Mace and nutmeg are related. Mace is the outer husk of the nutmeg, and has a stronger flavor. Historically, it was sold in pieces called blades. These have, alas, all but disappeared, and you'll have to use preground mace. As with the paprika, try and get the freshest you can find. If you can't find it, just leave it out.
It would be easier to give advice if you included the recipe you have. The ingredients, as you presented them, don't mean much. Personally, rather than garlic- and onion-powder I would use the actual alliums, perhaps caramelizing the onions, and lightly sauteing the garlic.
You can sub fresh oregano and thyme if you like, on a 3:1 basis. That is, if the recipe calls for 1 teaspoon of dried oregano, you'd use 3 teaspoons of fresh.