As Rick said, a lot depends on what you plan to use (paint or gelcoat). They say that with paint, 90% of the effort is in prepping the surface, and with gelcoat, 90% of the effort is after the gelcoat is applied. Either way, you do not need to remove all the old gelcoat. Roughen up the surface with 120 grit. Regular sandpaper is fine. You do not need to wet sand in your preparation phase. if you gelcoat, you will need to wet sand afterwards. I don't think you will need to wet sand paint, but someone will need to confirm that, as some types may require that.
Note- I recently gelcoated my project hull. If I had to do it again, I'm not sure I would do the same thing.