1st, very smart to consider a folder. They open up a lot of options - bike on bus, in car, plane AND... no lock needed! Just bring it inside everywhere. (fits in a shopping cart)
35lbs seems a bit on the heavy side. People still ride 40lb 3-speed utility bikes around Europe so don't dis-count a bike entirely on weight.
What you have to be wary of is off-brand components - brakes, shifters etc - with the least expensive bikes on the market. That level of componentry tends to be very heavy and has more "slop" than brand name gear.
Suggestions for alternatives:
Bazooka's 20" wheel folders.
http://www.bazookasports.com/viewproduct.php?cat=1
I considered these when I was looking at folders. They offer good value. If you get a pricelist from Bazooka, remember: it's in Canadian $. US$ equiv is less.
Downtube. (search this forum for threads whose titles include "downtube")
http://www.downtube.com/catalog/ (without rack and accessories, these bikes come in at 26lbs)
A Dahon Boardwalk can be found for around $270. I know this is a bit more than you'd planned but it's not much more and you get a LOT more bike. Any way you could swing it?
http://www.amazon.com/exec/obidos/tg...58474?v=glance
(other's here may have suggestions on where to find these bikes on special)