My "hybrid" is similar to Yo Spiff's bike. Mine is a 1989 Jamis Diablo(non-suspension mountain bike) with 1.4" slicks(for comparison, that translates to around 35c tires). If you can find something similar in good shape, that's not a bad way to go.
Bikesdirect.com appears to have some pretty decent bikes in your price range. In particular, the Motobecane Cafe Latte or Mercier Galaxy Tour. Both those have rack mounts. 28c tires on those which is more toward the road bike side of the spectrum than what I'm using on my "hybrid". I thnk those bikes would accommodate a 32c if for some reason you wanted a little wider tire. If I didn't already have road bikes to ride, I'd prefer narrower tires than what I have on my Diablo.
http://www.bikesdirect.com/products/...fe_latte_x.htm
http://www.bikesdirect.com/products/...alaxy_tour.htm
Buying used has the potential to get you the best bang for the buck, if you know what you're doing and are willing to put in the time to do it.