what's the difference between "lub" and "czy"?
Simply speaking, "czy" is in questions, "lub" is in other sentences. There are exceptions, but that's probably all you need to know for now.
Isn't "kubek" better translated as "a mug" and "a cup" better as "filiżanka"?
"Filiżanka" is only appropriate for a teacup or a coffecup (the little ones you can made out of porcelain). All other cups are "kubek". A mug also can be "kubek", but if it's a larger one for alcoholic beverages (like beer), we would say "kufel".