Well this totally flips your for cheap idea on its head. My first tip would be to not skimp on a guitar. Spend more then youre planning. buy from a reputable store like long and mcquade, here you will get great advice from good employees. Now, for one, you will have a nice guitar for when you get better. It will feel more solid, comfy and just better when you're learning how to play it. Also, you'll feel worse if you start to give up because you spent so much money on a guitar.
Source: bought a really nice drum kit and i played for 8 years before going to university and leaving it behind. Having a really good quality set kept me playing for a lot longer then i thought i would be. Then later when i got a lot better, the sound improved.
I go back to university tomorrow and will rip up my dusty old kit once more tomorrow before my flight. Thanks OP