All the matter in the universe will not end up in black holes. Most stars in the universe don't have enough mass to become black holes at the end of their lives. Neutron stars and white dwarfs are much more numerous; this is what most stars end up as. Secondly, black holes are not cosmic vacuum cleaners, whatever you may have heard. They will not suck up everything in the universe. They only suck up what crosses their event horizons. The universe, if it is open and keeps on expanding forever, will probably end up as a cosmic graveyard, populated by things like black holes, neutron stars, and white dwarfs. 

A black hole in an X-ray binary will only be a few times as massive as the sun. A black hole at the centre of an active galaxy can be millions of times as massive as the sun. It can get so big because the density of matter in a galactic centre is high so there is lots of matter for it to accrete. Both kinds of black hole can have an accretion disk. Usually most of the radiation we detect comes from the accretion disk. The accretion disk of a super-massive black hole will be much larger than that of one in an X-ray binary. This means that the radiation that we detect varies on a much longer timescale (days instead of milliseconds). 

It is actually difficult to determine the distance to black holes, but a nearby object believed to be a black hole from observations of strong X-ray emission is Cygnus X-1, located about 8000 light years away. Cyg X-1 is an ordinary star that is believed to be orbiting a black hole. 
A black hole in a close orbit around a star can pull the top layers of the star off the surface and down its own gravity well. Once the material passes beyond the black hole's event horizon, it is gone, and more stuff can be consumed by the black hole. You are left with a slightly larger black hole, and a slightly less massive star, so the black hole can pull a little more material off the star. This continues until the star is gone, and the black hole's hunger is yet unabated. 
Astrophysicists are fairly confident that there are supermassive black holes at the centres of many galaxies. These are millions of times more massive than the Sun, and are bigger than most stars. One of these supermassive black holes would tear the star apart and then accrete the gas. (See the Imagine the Universe! discussion on Active Galactic Nuclei for more information on these types of massive black holes.) We are also confident that very massive stars would end up as black holes, with masses 5-10 times that of the Sun. Collision of such a black hole and a normal star would be very violent, and may completely disrupt the normal star. 

More speculatively, much lighter black holes may have been created shortly after the big bang. If a tiny black hole passed through the star, then the star may continue without much disruption
So if the black hole in question is a few times more massive than our Sun (astrophysicists believe massive stars go supernova and leave such black holes behind), then it's much smaller than the star. In X-ray binaries, a black hole and an ordinary star are in orbit around each other. The star is distorted by the tidal force of the black hole, but otherwise normal, and only slowly (over many millions of years) loses gas onto the black hole. A direct, head-on collision is rare but if this happens, it would be very violent and the star would be torn apart very quickly. So quickly, in fact, that the core of the star (where the fusion is happening) probably won't have time to respond to the changing conditions before it gets torn apart. A completely torn-apart remnant of the star may form a disk around the black hole. 

What tears the star apart is the tidal force, or the gradient of the gravitational field. The gradient is less for more massive black holes, so if the black hole is about a billion times more massive than the Sun, then normal stars may be able to fall inside the event horizon of a black hole without being disrupted by the tidal force. Many galaxies are believed to contain Such supermassive black holes at their respective centres, although the typical inferred mass is rather less than a billion times solar (10 to 100 million may be more typical). 
If the black hole is rotating, you first orbit around it before passing through the event horizon. 
The Sun is not massive enough to ever evolve into a black hole; it will end its life in about 4.5 billion years as a white dwarf star. If a one solar mass black hole were to suddenly replace the Sun at the centre of our solar system, the orbits of the planets would not change. This is because the physical laws that determine the orbital motion of the Earth depend only on the actual mass of the Sun, and not on whether it is distributed within a sphere (like the Sun) or at a point (like a black hole). When material falls into black hole, a process called accretion, usually about 10% of the mc2 energy gets radiated away as the material approaches the black hole. The other 90% gets absorbed into the black hole and simply adds to its mass. In some cases, the material won't have a chance to radiate much energy and essentially all of the mass goes right into the black hole. 
A black hole is already essentially a geometric point, with effectively infinite density. There is no inherent limit to the mass of a black hole. There is a region around black holes called the event horizon. Once anything, including light, crosses the event horizon, it can never escape. This is what gives the black hole its name. The size of the event horizon gets bigger as the black hole gets more massive. This allows the black hole to "grow", in a sense, as more mass falls in. There is very strong evidence that some galaxies have black holes as massive as a billion Suns at their centres. 
Anything that falls into a black hole will get heated to very high temperatures (this is how the 10% of the energy gets radiated away... the material gets very hot, in a process similar to how meteors and space debris burn up due to friction as they enter the Earth's atmosphere). Also, once the material gets very close to the black hole, tidal forces will stretch it very thin (just think about the effect that a Moon has on the Earth's oceans, and a typical black hole is likely to be much more massive than the Moon). 
By definition, you can't see a black hole at all... again not even light can escape from within the event horizon. Black holes warp space so much that if you could orbit a black hole close to the event horizon, you could see the back of your own head... light reflecting from the back of your head would get bent around the black hole so that you could see it. 
Black holes can be produced by supernovae, but other production mechanisms are possible. Many galaxies for instance, including our own, may have super-massive black holes at their centres, which have grown by accretion where the galactic densities were highest. Wherever sufficient mass is crammed into a sufficiently small space a black hole will result. If matter is added to a neutron star for example, at some point (somewhere between 1.4 and 3 solar masses) the internal pressure within the star cannot resist gravity and a black hole is formed. Isolated black holes will be almost impossible to detect. There are a number of binary stars however, where one of the pair is a compact object (white dwarf or neutron star or black hole) accreting material from its companion (and generating X-rays and gamma-rays in the process) and studies of the binary system motion (using the Doppler shifts of spectral lines) suggest that the compact object is too massive to be a neutron star. Cygnus X-1 is just such a binary, where the likely mass of the compact object appears to be considerably more than 3 solar masses. 

Adding mass to a black hole just makes it more massive. It doesn't fill it up. Quasars may represent instances where black holes have swallowed significant fractions of entire galaxies, billions of solar masses. Once matter has entered a black hole, it is not accessible to observation. All we can know about that black hole is its mass, charge and angular momentum. Everything else is open to untestable speculation. 
In 1974 Stephen Hawking made the surprising discovery that quantum mechanics permits black holes to emit particles, an effect entirely forbidden under classical mechanics. For massive black holes the rate of particle escape is very low. A singularity with the mass of the Sun, for example, would lose an utterly insignificant fraction of its mass over many billions of solar lifetimes. 
Many stars are observed to be in binary systems, where two stars are orbiting each other (as the Earth orbits the sun). Another thing to know is that, the more massive a star is the faster it uses up its nuclear fuel (mostly hydrogen); therefore the sooner it dies. If we happen to have a binary star system, and the more massive of the two stars explodes as a supernova and it leaves behind a neutron star or a black hole, then it will result in a binary star system with a normal star and a compact object orbiting each other. All these things working out is rare, but there are over a billion stars in the galaxy, so even rare things happen fairly often. Now, imagine that the normal star then runs out of its fuel. The first thing it will do is expand as it enters its "red giant phase", as our Sun will about 4,000,000,000 years from now. Then, some of the star's outer atmosphere will spill over onto the black hole. It will eventually fall in, and in the process become very hot. We can observe this hot gas with X-ray telescopes, so we call this an X-ray binary. 
As far as the significance of the X-ray emission, it is to let us observe the effects of the black hole, and therefore learn something about it. Black holes do not emit light, in fact they are so dense that they trap it. Therefore, the best way to learn about them is by observing the material they effect. Observing X-rays from an X-ray binary is one effective way of doing this.
Black holes emit matter because their gravity field is so intense. Specifically, black holes emit particles by a process known as Hawking radiation. What is ordinarily considered empty space is full of virtual pairs which are particle-antiparticle pairs which pop into existence, separate a very short distance, come back together, and disappear a very short time later. This happens so quickly that the Universe doesn't notice that for a short while there was extra mass-energy. The law of conservation of energy only holds over sufficiently long periods of time, and can be briefly violated. 
In the neighbourhood of a black hole, the virtual pair can pop into existence, and when they separate, one can go so deeply into the black hole that its falling releases enough energy that the other particle can continue to exist, outside the hole, with the total energy of the virtual pair being zero. It takes a huge gravitational field to release such a large amount of energy when the particle falls such a very short distance. Such huge fields are found only around black holes. The size of the event horizon is determined solely by the mass and spin (if it happens to be spinning) of the black hole. If two were to orbit each other (or any two massive bodies such as neutron stars) a lot of energy in the form of gravity waves would be emitted. This will leak energy out of the system, until the two objects merge. It would appear that the smaller one was swallowed by the larger, but it really is a merger around their common centre of mass, and the event horizon would grow according to the new higher mass. 
The temperature of a black hole is determined by the 'black body radiation temperature' of the radiation which comes from it. (e.g., If something is hot enough to give off bright blue light, it is hotter than something that is merely a dim red hot). For black holes the mass of our Sun, the radiation coming from it is so weak and so cool that the temperature is only one ten-millionth of a degree above absolute zero. This is colder than scientists could make things on Earth up until just a few years ago (and the invention of a way to get things that cold won the Nobel prize this year). Some black holes are thought to weigh a billion times as much as the Sun, and they would be a billion times colder, far colder than what scientists have achieved on Earth. 
However, even though these things are very cold, they can be surrounded by extremely hot material. As they pull gas and stars down into their gravity wells, the material rubs against itself at a good fraction of the speed of light. This heats it up to hundreds of millions of degrees. 

Current theories of gravity are based on the geometric curvature of space. Current theories of other fundamental forces in the universe are 'quantum field theories', where particles pass other particles back and forth among themselves to interact. We know that geometric gravity theories conflict with quantum field theories, and that this conflict means that we don't know what happens under extreme conditions. A quantum theory of gravity would involve particles passing 'gravitons' back and forth among themselves. This quantum theory would probably be a more accurate description of gravity, and might be accurate enough to describe the extreme conditions found at the centre of a black hole
There are indeed generally two categories of black holes those formed by massive stars, perhaps less than 100-200 times the mass of the Sun, and supermassive black holes (as big as a million Suns) found at the centre of most galaxies. There is actually new evidence for what you call medium sized black holes which according to one theory, may have formed from the merging of smaller black holes over time or simply from the slow build up of accreting nearby material. Recent studies indeed show that perhaps all galaxies with bulges have a supermassive black hole, which contains about 0.2% of the mass of the bulge. Depending on the size of the galaxy, that might translate to a few million to a few billion times the mass of the sun. This fraction, 0.2%, is too small for the supermassive black hole to control the motion of all the stars in the bulge. On the other hand, these masses are indeed too large to have formed from a single star. 
So how did they form? We don't have a detailed answer yet. We do know that gravity can act in a catastrophic way. If you have a region of enhanced density (say more stars per volume than in surrounding regions), its gravity will be stronger, which tends to increase the density more ... . 

The recent finding, that the mass of the supermassive black holes is closely related to that of the bulge, shows that the formation of supermassive black holes is also closely linked to that of the host galaxy. That is, they (the galaxies and the supermassive black holes) probably grow together. This is a really exciting area of research --- check back with us in a few years' time, and we may have a more definitive answer for you by then.
Black holes are like 40 ton gorillas, they sit wherever they want to. And that will be a major problem with using them as a source of power. How do you get one to where you can use it, and how would you keep it there once you have it. Black holes are sources of extreme amounts of energy and are responsible for some of the most luminous objects in our Universe (AGN, etc.) as well as some pretty hefty beasts in our own Galaxy. 
Black holes are really 4-dimensional (3 dimensions of space and 1 of time). Sometimes we see drawings of a black hole that may make it look like it's 2 dimensional, but that's because we don't know how to draw 4 dimensional objects on a piece of paper. Time does not slow down and then go backwards at a black hole's event horizon, but a lot of strange stuff does occur. If you (in a space ship, for example) were to approach the event horizon and cross it, to a person watching you from a great distance it would look like you moved slower and slower as you got closer and closer to the horizon. To them it would look like you never quite reached the horizon. But this is an illusion caused by the fact that the light you emit from your space ship is taking longer and longer to reach the outside observer. This is due to the black hole's immense gravity. From your own point of view, you reach the horizon and cross it, with nothing special happening at the boundary. But of course, the gravitational forces of the black hole will crush you do death sooner or later.