I would start him off with an acoustic. Spend $200 on a guitar from guitar center, get him a couple lessons and then see where HE takes it. I kind of shun starting off with an electric. I'm not sure why... it just doesn't seem right.
There is no reason to spend any more or less for a first guitar. I spent two hundred on my guitar 8 years ago and it plays just fine. I have had the urge to buy a $1000 Martin since, but always come back to my old faithful. If I was playing on stage or studio, then yes I'd buy better quality, but for sidewalk performances and everyday playin' I find my guitar does just fine.
If he really wants to play he wont need much instruction (lessons). Both my brother and I learned how to play from tabs off the net. I've been doing that for years and I'm still not bored of it. Maybe at some point he might want some blues instruction, or something else, but for now he should have plenty to learn. It is america's favorite instrument, there is a ton of free stuff out there.
Tabs are wonderful b/c as you play the songs of other artist you learn different chords depending on the artist style. Eventually you start mixing and matching the chords you've learned and badda boom, you've got you're own chord bank and style. Mix "The Girl from Ipanema" and the Dead Kennedy's and see what you get.
Ok, I've over extended my stay, good luck, I hope it works out for him. The relm of guitar playing and song writing is wide open. Just remember, he'll only go for it if he wants it.
