I believe that really means several different things to different people. I suspect that it could mean getting into a relationship. But it can also mean having sex or some sorta one night stand thing. Someone correct me if I'm wrong, this is one of those new "slang" terms that may be used differently in different locations.
Nahh, Lance, around here, hooking up just means getting together with someone, kissing and rubbing whatever else happens afterwards. If it turns into a relationship later, then it does. But "hooking up" just means getting with somebody, sex may or may not happen.
We used to say in college that so and so hooked up with so and so, and the next question was always "Did he screw her?"
That is NOT true. Hooking up doesn't necessarily have to be sex related.
ie. "We hooked up last night." can mean we went to see a movie or out for a drink. Of course, it can also mean sex but more often than not it can be used to describe two people getting together casually or it can describe two people starting a relationship ie. "They hooked up last year."
Another example, "X and Y hooked up last night after the party," can mean they got together, made out, had sex, whatever...
So as you can see, it can mean a variety of things, it just depends in what context it was used.
As everyone has already said hooking up can mean a variety of things. I'm 18 and a senior in high school and have found that when someone says that they are hooking up with so and so it is usually a precursor to them actually "going out". It can last for a week or a couple of months, but it is basically just all the advantages of having a boyfriend/girlfriedn with having to do all of the other stuff like get them christams presents or stuff like that (although thats proablly a good idea if you really like the person)