Cutting out the sod shouldn't be a problem if it's just around the house. Sod cutters are great, but they can be big and bulky and depending on the design of your house, you may not be able to cut it properly.
As for cutting it out, if you want to salvage it, get the square shovel, and you don't really need to dig it too deep. Just make your 4 cuts, then peel it back. How old the grass is, and what's underneath will determine how easy this process is. If it's fairly new grass, it should come up fairly easy.
Grass is a weed and is very resilient. It will grow back, just don't leave it too long.
I put irrigation in my parents place last may, and we got 1/2 way through before it rained. Problem was, we had the back yard all dug up. Because all my friends had gone, I had to finish the rest and once the rain finally stopped and I finished it a few weeks later, the grass came back no problem.
I like to dig in with the shovel, and press it forward and then up a little when underground. This loosens up any small roots or hard dirt under the grass and makes it easier to peel afterwards.
You'll need a tamper though to even the dirt underneath out, though. A 4x6 is nice. 10x10 for big jobs.