If budget is a top priority, I guess I'd start with a Windsor Tourist from bikesdirect:

Save Up to 60% Off Touring Bikes | Commuting | Commuter Bikes | Windsor Bikes - Tourist

At $699 you're getting a new bike with decent components. I'm sure you can save a bit by going the craigslist route, but it's often difficult to find a bike that you like in a size that fits you. If your rides are relatively short, this bike will be more than enough for you. It will even do a great job on long rides... at that point you'll find things that you'll want to change or upgrade... but for commuting, the windsor tourist would be excellent. If your trips are in the 1-5 mile range, I doubt you would be suffering at all on almost any bike that you choose. There are new bikes on bikesdirect.com for as little as $249... no tax, no shipping.