Ron has heard about it, it's just that his brothers have taken great time and care to tell him a load of rubbish in order to scare him, one assumes for their own amusement :
‘How exactly do they sort us into houses?’ he asked Ron.
‘Some sort of test, I think. Fred said it hurts a lot, but I think he
‘So we’ve just got to try on the hat!’ Ron whispered to Harry. ‘I’ll kill Fred, he was going on about wrestling a troll.’
Harry Potter and the Philosopher's Stone
Within the book, the only character we see who actually seems clueless about the ceremony (aside from our hero, who's been raised by Muggles) is Hermione, who's been raised by Muggles. The others just seem nervous/terrified in general terms.
With regard to what first years know in general, certainly the Sorting Hat is expecting that the first years will be aware of its purpose, although this may be because McGonagall (or whoever filled her role for the previous thousand years) is expected to explain it to them before they walk in:
And now the Sorting Hat is here
And you all know the score
I sort you into houses
Because that is what I’m for
Harry Potter and the Order of the Phoenix
And when Harry's son goes to school in the final book, it seems that he has told him about the ceremony in general terms, but without offering any specifics about the sorting itself or the choice that the Hat makes. The implication being that the Sorting is something of a rite of passage that the parents don't wish to spoil:
'...But if it matters to you, you’ll be able to choose Gryffindor over Slytherin. The Sorting Hat takes your choice into account.’
‘It did for me,’ said Harry.
He had never told any of his children that before
Harry Potter and the Deathly Hallows