No problem at all... that's a healthy price range if you shop wisely. I bought a Jackson that was on sale at Guitar Center for that price; it plays great and sounds fantastic. I'd say the build quality is as good as if not superior to my American made Fender Strat, which cost 4x as much.

First order of business is to decide which do you want, single coils or humbuckers? Single coils have a bright tone that tends to stand out in a mix really well. Humbuckers have a richer, fuller sound, great if you're the only guitarist in the group, or if you want to cover a wide variety of styles. Also, if you're looking to have a really heavy sound, aka Slash, then humbuckers are a good choice, but a single coil setup can be made to sound heavy too.

After that, I'd try a few styles... some guitars lend themselves to a nice, rich rhythm sound, great if you're going to be playing a lot of chords. Other guitars are more oriented towards "shredding"... their necks are thin, the action is low, and usually are meant to have light gauge strings so that its really easy to do stuff like hammering on/pulling off. Just think about the kind of playing you want to do... if you want to be a lead guitarist shred master, get something like a Jackson or maybe an Ibanez (on sale?) that is geared towards that. If you're looking for something that's more an all-rounder, look for Strat/Les Paul style guitars (not real Strats or Les Pauls though, as they will be way too much).

If you can go to a place like Guitar Center, and try out some guitars, that would help a lot, but don't look at guitars that are out of your price range. Think about how much of the fretboard you want to realistically utilize too.. for instance, my Strat sounds, well, like a Strat... great! but, there are spots up high on the neck where its just not realistic that the guitar is going to play like the Jackson would.

In my opinion, the less options a guitar has, the better. I really don't mess with the volume and tone controls much on the guitar... I do switch between pickups, but that's about it.

If you really want to save money, don't be afraid to buy something that is ugly, cosmetically damaged, or both... as long as it plays well and sounds good and feels like a good fit for you. If the body shape is awkward, move on to another. You should be able to find a number of options in your price range. Don't buy the first thing you come across... take the time to find something you like. GC tends to be a little pushy with sales, so watch for the "yeah, that's our last one, and I just had a guy in here looking at" kind of ploys. Good luck, have fun shopping, and let us know what you end up with!