yes, i'm sure a cheaper bike would be fine for leisure rides around the city. my wife has a cheap road bike (paid $380 new for it), a Forge CTS-1000, and it's working out great for her. she doesn't do long rides or ride at the same tempo i do, so it works just fine since she doesn't put it through much abuse.

if you find yourself getting more serious after a while, you'll probably have a better idea of what you'd want to upgrade to. then again, the frame on your cheaper bike may be ok and you can just upgrade components, but sometimes for the cost of upgrading components you could find a much better used bike on ebay or craigslist. i found an older (2001) Trek 1200 that had been upgraded to Shimano 105 components and carbon fork, and i love it. i'll probably ride it a year or two and then when i have some money saved up go buy something nicer, maybe a carbon bike of some sort.

i will say that i test rode a friend's carbon bike (custom-built) with Ultegra components and they didn't feel much different from my 105s.