I'm still in the brewing-from-extract-with-specialty-grains level of experience, although I think I may look into building a basic, inexpensive (I've been told $100-$150) all-grain setup for my next batch.
As far as a kit goes, I got my first one from my local homebrew shop (LHS), and it has done pretty well over the years. I'm a believer in the local shop approach. Every one I've ever been in has had pretty nice guys who want to help people make beer, and the only stupid question is the one not asked.
As far as inexpensive beer goes, that depends on what you drink. Many years ago my beer snobbery reached a level where the cheapest beer I drink comes in around $5/bottle. So, at $40 for a 5-gallon batch is a bit cheaper.... my beer isn't as good as the higher-end stuff out there, but it's as good as, if not better than everything else.
My wife just did her first batch this last week. She does pretty good with mead, so we'll see how well it comes out in about a week.
Qarl - sweet setup! Someday...
I love the pic of the... IPA? Amber? The one that only has about an inch left at the bottom of the glass