'Sharp' sand is better, but play sand will work. Ratio of about 5:1 sandortland cement for the deckmud.
You might want to also check www.johnbridge.com/forums
Personally, I'd rather have a shower made with a surface membrane, but a conventional shower as you describe is also reliable (and probably less expensive) than a surface membrane, but it does have advantages - basically, it dries out MUCH faster, which may be a factor when used multiple times a day, or in an area with high humidity levels. You might also want to check out www.schluter.com and look at their Kerdi shower system. This is one of several competing systems, but is the 'original'.