I know it's early days yet, but one of the most important things in choosing the 'right' guitar is the fit- if it's not comfortable to hold or easy to reach all of the frettboard etc. Try before you buy as it were. How big is your son? Perhaps a 3/4 size classical would be good? The neck on a classical tends to be much wider than a conventional accousic steel strung instrument- in this aspect my other half had to have the accoustic because her hands are too small to stretch accross the frettboard on a nylon strung classical guitar. I ended up getting her a Yamaha 1/2 or 3/4 size accoustic (I forget which), it was about £130.00 new. Though it's relatively inexpensive compared to my guitars, it holds its intonation well and has a nice tone to it.
http://www.yamaha.com/guitars/acoust...RODUCT,00.html
http://www.yamaha.com/guitars/studen...600026,00.html
Secondhand might be the way to go, but watch out for repairs etc. As far as the music teacher talking about cheapo guitars not holding tune... that depends; I have a secondhand classical 3/4 size that came from a 'junk shop' and cost about 15 quid- one new set of strings and a good clean and a small bit of wood glue later (to hold one of the internal body struts in place to stop vibration) and I have a decent little guitar that lives downstairs. It's not up to the quality of my Seagull, but for what it cost I cannot complain. One thing I will say: DO NOT buy an instrument from one of those household mailorder warehouses like Argos (in the UK), even if it is cheap. Propper music shop is the way to go.
As a beginner having an instrument that is comfortable to hold and fits the student is of more importance than having the advantages of Uber muso 'it never goes out of tune' expensive guitars, and it will help him learn how to tune the thing propperly- this imho is waaaay more important and ability/skill (though you can cheat by using an electric tuning device - cost about 20 quid) for a beginner to grasp.
Shop around with your son. Any music shop worth its salt will do their best to get you what's right as opposed to making a sales target.