You most certainly can buy a new good quality guitar at that price range! However, it depends what kind of guitar style you're looking for... Are you looking at an electric, or an acoustic. I bought one for about the same price almost 7 years ago at Costco. It was a full Yamaha electric outfit with amp and cord, electronic pitch tuner, replacement strings, cord winder, Truss rod wrenches and a lessons for beginners book. Though many would say my Yamaha is a piece of junk, consider the fact that Yamaha has been making musical instruments for well over 100 years. Yes, they're known for more than just motorcycles! Hell, even their company logo attests for their long history in music (They have three tuning forks, all spaced 120 degrees from each other)!
As I've stated before, there are two basic styles of guitars: Acoustic and Electric. Also take in to consideration the type, as there are standard guitars and bass guitars. If you decide to get an acoustic, you'll be granted more playing freedom (as opposed to an electric), meaning that you won't be limited to cord length and an empty outlets to plug in an amp. Also, many are amplified, so you'll be able play it like an electric.
If you decide to go electric, you'll be able to play it like any mainstream rocker today. Also, you can buy a Marshall portable amp from ThinkGeek which will allow you freedom of an Acoustic with the sound you can only get from an electric.
The first place I would go to find cheap beginner guitars is Sam's Club or Costco. Yes, not the choice of many but if you're looking for a relatively cheap (and new), good quality guitar, it's worth looking into.
Another would be going to the local swap meet. It's a great place to search for name brand guitar makers like Fender, Gibson, Rickenbacher, Gretsch, etc., all at very reasonable prices. If you decide to go this route, be sure to ask the seller many questions about the guitar you're looking at buying as many are the result of theft and the last thing you need is to go to prison being accused of a crime you didn't commit!
Another really good source is your local pawn shop. Many have a wide selection of used name brand guitars. However, be prepared to pull some teeth, as many pawn shop owners will overcharge for name brands. Some pawn shop owners have also been known to gouge for "Big Box Store" Yamahas!
Last, but not least, is your traditional guitar shop. A lot of these places have been known to refurbish old guitars and sell them at reasonable prices. Even guitars like the famous Fender "Strat" and Gibson Les Paul have been known to be sold at fairly reasonable prices (though "reasonable" would mean outside your budget).
One place I would be a little reluctant to buy from is eBay. Though they have many good guitars available, some sellers have been known gouge, even for counterfeits. Yes, counterfeits. As in "Made in China"!
As a parting note, whether you get an electric or an acoustic, I highly recommend getting the Fender Chord Book (Sorry I don't remember the actual name of the book; it's in my gig bag buried under a mound of clothes; search google for it). It's the most invaluable book I have. It's so good, it even shows the correct finger position for Darren Malakians' (of "System of a Down" fame) famed "Drop C". Also, there's a superstition about how guitars should have a name. I don't know too much about it, but many people I know have named theirs.
I hope I've been helpful in helping you buy your first guitar. It can be confusing if you're not much of a musician. Besides the two guitar types, there are various styles like bass guitars (ranging from 4-strings and up), semi-hollows (similar to the one Ted Nugent used writing "Stranglehold"), 6- & 12-string guitars (both electric or acoustic) and even double necks (there's even a bass/electric double neck!; almost all double necks manufactured are electric and typically range from 12 to 18 strings). Good luck and take care.
Fender.com (For Chord Book)
Amazon.com (For Chord Book)
ThinkGeek.com (For portable Marshall amp)