Even real cheap guitars can be made to sound good depending on how you play them, what strings you're using and how it's miked and processed.
I've got an Ovation for a lot of stuff, but I actually use a really cheap
Diatone acoustic that cost $35 at a pawn shop for a lot of recording.
You've just gotta use new, light strings... put a bit of decent reverb on it, compress the sound slightly and use a decent mic.
It ain't audiophile quality but it does the job.
Mic placement and EQing makes a bit difference too. for instance with an acoustic guitar, you might want to roll off any frequencies below 100khz.