* Buy him an electric. He can jam with his buddies and have some fun with it....
Later, after he gets some chops, he can save his $ and purchase a nice Acoustic.
My advice would be to look for the Mexican Made Fender Strats... they retail in the $300-500 range new, and you could probably pick up a used one for $250 or so. The Strat is easy to learn on, molds to the body and sound sweet... see link below for examples:
http://www.guitartrader.com/dir3.icl?secid=1021&subsecid=1136&catid=1138&orderidentifier=icat_orderID&e=o&k=fender_mexican_strat