After playing guitar for a couple decades, my interests have shifted towards setting up entry-level guitars to be better, playable instruments. Through much experimentation, I have come to believe that any cheap guitar can be made playable and more enjoyable.
It is my love for stringed instruments that makes me look at these poor, orphaned guitars with puppy dog eyes. While a good friend was visiting last year, he mentioned that he desperately wanted a backpack guitar for the rest of his wilderness journey. That next day, we happened to be browsing a flea market when we spied an inexpensive child's guitar. It was the size he wanted, and I felt strong that we had a winner.
One more bit of advice, if you are a guitar player, please learn to set up your own gear. It is incredibly easy and it will give you an intimate understanding of your guitar. Guitar set up is highly subjective, much like asking a stranger to taste your dinner and tell you whether you will like it. And once you get comfortable with the basics, any new issues will not necessarily mean an expensive trip to the shop.
With all this said, a lot of my knowledge came form reading "Dan Erlewine's Guitar Player Repair Guide." This book covers everything that a luthier would need to know, while being simple enough for a novice to understand. It might even give you the confidence to try instruments that you would not have gambled on previously.