So the question is, is paying $28 USD worth the likely hassle we'll get if using UK / Canadian passport combination......
Well, for a British citizen, it's not an option, it's a requirement for all citizens of Visa Waiver Program countries... so if your husband wants to enter the US, he has no choice... they won't even let him on the plane in the UK if he hasn't completed the ESTA before flying.
Basically, it is a replacement of the green I-94W landing card that you used to fill out on the plane if you were travelling on the VWP. Now, instead of handing you the green landing card on the plane, you are required to fill it out online before you travel (the ESTA). It basically determines if you are able to enter the US without a visa or not.
Edited (sorry, posted before I'd finished writing it!) to add: It's pretty straightforward... you answer the questions and pay the $14 ($10 fee, plus $4 processing charge) and then get the ESTA approval through. You don't have to print anything off to take with you as it will be in the US immigration system, but you can if you want to.
The ESTA is valid for 2 years and so as long as your details or circumstances don't change, you don't have to do it again for another 2 years. But if your address changes or you get any convictions or anything, you have to update it and pay again.
If it turns out you are not approved for ESTA, you will need to apply for a visa to enter the US... which can take a few months, which is why they recommend doing it well in advance. You're supposed to do it no later than 72 hours before the flight, but as CuppyCake found, it is possible to do it last minute.
They won't staple anything into your passport, I don't think, because there's nothing to staple - the ESTA is just an electronic number in the system that is linked to your passport number.
Although I'm a UK citizen, I've been told by the US Embassy I'm not eligible for the VWP/ESTA anymore (due to a conviction), so I've had to apply for visitor visas to enter the US for the last few years and will have to do so for the rest of my life.