WOW looking at the replies here i see i am not the only one that has picked up the guitar around the 40 mark. I have just started learning about 18 months ago with my kids.
I too learnt that there is ahuge difference in guitars. Basically i jus started on a very cheap guitar (Ashton) and when my family wanted to buy me a neat xmas gift we went to our favorite music store. The lesson i learnt was to first ignore the price tags and the brands. Wander through the shop and pick up every guitar that catches your eye and sit down and play them.
The sounds differs drastically from one to the other, gradually you will end up with a few guitars that you like, that is when you look at the price tags and see what fits into your budget. The important thing is the "what you like" for sound.
Dont forget also that a simple change of strings to a good quality set can also make a huge difference to the sound of the guitar.
I actually found that some of the $1,000 plus guitars actually sounded worse (to me) than my $90 cheapy. I ended up settling on a fender for $400. I put a set of high end classical nylon strings on it and it has the perfect sound for me.
Oh and if you are buying an electric / accoustic fdont forget to ask them to plug it in at the shop and this will give you nad idea of the sound through the pickups as this can make a big difference also.