If you do go the used route, keep a little in the budget for a tuneup at the bike shop. It's the rare used bike that doesn't need adjusting and lubing.

Stick with the bigger brands - Giant, Trek, Specialized, etc. and do a little research on the specific model before going to buy. Do a good test ride and check shifting, brakes, etc. If something doesn't feel right, don't buy it. Check the spokes, make sure nothing's bent, etc.