I usually use white wine vinegar, but you can use pretty much any type of vinegar. The only restriction on the type of dried pepper that you use is that the peppers must fit into the vinegar bottle. The acidity in vinegar may kill some types of pathogenic bacteria, but it won't kill all of them, so I always pour the vinegar into a saucepan and boil the peppers in it for about five minutes to kill any bacteria on them. Since boiling vinegar can fill your kitchen with some really irritating fumes, I strongly recommend that you keep a lid on the saucepan. Once the boiling is done, allow the vinegar to cool, and then pour it back into the bottle, along with the peppers.
Cayennes are good for making hot vinegar.