As others have said, Taylor guitars are very high quality. I'm currently thinking about getting a 314ce at about $1500. There are other similar quality guitars at the same price. I played a Cole Clark (hand made Australian guitar) that was also $1600. Martin has some very nice guitars also in that price range.
Having said all that, there are still some very nice guitars in the $500 - $1000 range (including some lower end Taylor models like the 114 and 214 series and some lower end Martin Guitars). I've played some Yamaha, Takamine, and Seagull acoustic guitars that played very well and sounded good at around $500. Still, I'd personally rather save up to have about $800 and buy a Taylor 114ce.
Walden guitars are also pretty decent at a lower price, but again, not comparable to a Taylor. As someone else said, if you're looking for a Taylor T5 (hybrid), a Crafter SAT is a pretty comparable alternative at 1/3 the price, but it's still not going to be the quality of the Taylor.
You really get what you pay for, and if there were something as good as a Taylor at a significantly lower price everyone would be buying it.