What kind of music do you like/want to play? The main factor in me picking up the guitar (god, that was half a lifetime ago now and I still mostly suck) was that I wanted to be able to play Beatles songs.
I would probably play more folky stuff. I'm not ever going to be a guy that is trying to play Metallica or what have you.
Serious suggestion (despite what the name sounds like): Cardboard Dulcimer. It's basically a Mountain Dulcimer with a hardwood fretboard and a (painted) corrugated cardboard body. You can buy them built for ~$60+ and kits from $40 and up. Here, first googled link - http://www.backyardmusic.com (Mountain Dulcimer http://www.youtube.com/watch?v=yZ2B0PCdKo )