Fit, fit, fit. A $400 bike will be fine. You can get a better "bargain" buying used, but you have to have some knowledge, and if it doesn't fit, then it is no bargain.
Flat bars on the road have some disadvantages. Road bars are shaped like they are for a reason - they provide a number of different hand and body positions depending on terrain, speed, etc. If you get some nice wide road bars (maybe 46cm given your height) and a frame/stem combo that puts them high enough, you might be surprised at how much you like them. Often the reason people don't like road bars is that they are way too low, whereas flat bars usually have a rise stem putting the seat/bar differential less.
That said, I have put many miles on my mtn bike with flat bars and bar ends. I can't live without the bar ends though.
And for another alternative, consider mustache bars. In fact, lots of good reading here about bike fit as well. I have their "noodle bar" on my road bike:
http://www.rivbike.com/article/components/bars_and_tape
http://www.rivbike.com/article/bike_fit/fit_sizing_position