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Originally Posted by Manic_Skafe
Even though they aren't too bad to learn on, those starter packs aren't even worth their low price. If you ever decide you want to play seriously or with other people, you'll have to replace everything that came with the starter pack.
Put as much as you can into a decent guitar ($2-300) and about $100 in a small practice amp. You don't have to break the bank but you should know that you get what you pay for and if you buy quality equipment then it'll not only be easier to learn on - if you decide you don't want to play guitar, you'll at least have some resell value.
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I have to disagree with this. Squiers, Epiphones etc are great instruments for people who don't want to (or can't afford to) invest in a top-of-the-line guitar. I know a few guys who play Squier Strats and have had a turn on them a couple times myself. They're not the same as a Fender American by any stretch of the imagination, but they are good instruments.
As to the amp, well yeah if you want to perform it's not surprising that you'll need to invest in a performance amp, but for jamming at home a little 10 or 15 watt practice amp is really the better solution. Aside from the difference in cost ($80-$100 vs $300 and up), a big performance model is just too much amp for practicing on your own. If you're going to invest in an amp and an entry level guitar and you can save a few bucks buying them together, why not go for it?
As a rule, your starting equipment is going to get replaced eventually. When and how often depends entirely on how serious you are about your music.
I do, however, agree with Derwood's advice re: acoustics. The thicker gauge strings and wider neck of an acoustic are less forgiving, meaning that you'll form better habits early on. In the grand scheme of things, however, it probably isn't going to make a big difference either way.