I have a Dean parlor guitar. Sounds great, records well, well-intonated, low action and never seems to go out of tune. It was $400, however. More than I'd spend in your situation. Unless, of course, it's an instrument you wouldn't mind inheriting in case the kid abandons it.
I've watched many kids fail at guitar. They start out fine but I think what ultimately turns them off is the physical effort and pain involved. You're a guitarist, you could hammer nails with your fingertips. But for kids starting out (and for us delicate keyboardists, too) it's literally painful. Once they realize just how many hours they'll have to put in, they give up.
If it was me, I'd seriously consider an electric guitar as a starter for that reason. And consider the parental benefits, too - mainly the ability to practice with headphones.