You can do any commute on an old well-built mountain bike, which is why I love craigslist. You can keep it as is and ride the hell out of it, or put it on slick tires for the road and still ride it like hell. You do not need to buy a department store bike. An old mountain bike may eventually need some parts replaced, but I bet you could buy everything you need to commute and have an old mtb in commuting shape for the amount of money you want to spend. And where I live, $350 can get a new Rockhopper or a very nice Diamondback at the local bike shops. If you're keen on a new road bike, there are some new bikes that are in your price range, but they won't be very great; I'd say the bang-for-your-buck price starts around $400 (Just a guess, I'm no roadie), unless you're hunting on craigslist. Since you live in flat terrain, I suggest single speed or fixed gear bicycles if you are keen on a new road bike.

The idea of buying a low quality bike now and getting rid of it when you can buy a better one doesn't sit well with me, maybe because I'm cheap. Why not get a decent bicycle now and upgrade it later? You'll love being a bike geek!