The biggest thing with department store bikes is that the assembly is such a roll of the dice. Retail assembly is usually done by piece-rate contract assemblers, rather than store employees, and there's neither time nor room allowed for more than a cursory function check, let alone a test-ride. If you, the buyer have little to no mechanical knowledge, particularly about adjusting bike components, then you may get home with a bike that doesn't work right, and no other option than to return it to the store for another one.

There are some not-bad bikes out there. A quick walk through the bike aisle at Target this morning turned up a couple of interesting tidbits:

At $259 : The Schwinn Ranger 26" MTB. All steel, even the bars and seatpost. 3x7 'A' series Grip-shift Shimano, with V-brakes. I actually have a used one, that my 12-year-old learned how to ride on. It's definitely a cost-point bike, but it doesn't have any silly features, other than a basic coil-spring fork, and has been holding up well to the bumps and bangs of a rookie rider. I'm not surprised that it seems to be durable, it probably weighs 40 lbs. It's a tank.

For $110 more (that's $369) is the Schwinn Circuit hybrid; Aluminum frame, all Tourney with Rapidfire shifters and mech disk brakes. Shipping weight is listed as 31lbs, but it feels lighter than that on the stand. It also surprised me for how well turned-out it is. Replaceable RD hanger, rack and fender mounts, even mid-mounts on the front fork. The cranks (and probably the BB) are the only thing obviously cheap-looking, but it appears to be a standard threaded unit, so it's easy to remedy if needed.
Seriously considering this one as an upgrade for Mr Skinnylegs when he outgrows that 15" frame MTB