Just a quick adendum to my last post:
I have a strat that I got for $300 that out tones majorly expensive custom instruments. It's a mutant: it was made from several different guitars, but it's got TONE and it plays really really well. My favorite instrument- my 81 Korean made Fender Jazz Bass was about $250 used, but the neck on it is perfect. Eventually the pickups died so I replaced them with EMG pickups and I haven't looked back. The tone is incredible, it outplays $1,500 Warwicks and has a tone I like a lot better too.
So shop around, you should eventually find something pretty cool.