That sounds like a decent deal. My LBS sells lots of KHS bikes and from what I've seen, they make a decent bike at a decent price. I take it that this is a used bicycle? If so, definitely give it the once over and make sure it hasn't been crashed, the shifters all work well, etc. Don't forget to check out other big ticket items like wheels and tires and saddle and make sure that they're all in good shape. If you're looking to carry gear with you on a commute, be sure that you have a way to attach said gear to the bike -- specifically, are there braze ons for racks (if not, you can improvise).

If possible, take it to a shop and have them give a look at it. They'll let you know if there's anything horribly wrong with it or if it's as good a deal as it sounds.

Good luck with it!