Hi okl,
As with all things in life, it really depends on how far your nephew or his parents see him going with this.
This would affect your decision on whether you get him a cheaper guitar vs a reasonably well made spanish one.
Also, it depends on the style your nephew is playing, is he learning classical guitar or learning pop songs e.t.c?
It is usually a requirement to use a classical guitar for 'classical' training, whereas it is usually more preferable to use an acoustic(folk) for pop(but you could use a classical too if you want).
Both types of guitars have their pros and cons.
A typical classical guitar uses nylon strings, which is a lot less painful on the fingers the beginning guitarist.
If your nephew is learning classical guitar he'll most probably be using his fingers a lot. This will affect the tone produced by the strings on the guitar - it will most probably sound a lot more mellow as compared to the sound produced when using a pick.
This is where a well made guitar would usually have the upper hand against mass produced ones. Depending on the type and combination of wood used, usually the projection of the sound and tone(I'm using this word very loosely) of the guitar would be superior to an 80 dollar off the shelf one.
Price may not equate to quality though. I've heard $600 guitars that sounded better than ones going for more than double that price before.
An acoustic typically has a 'brighter' sound and uses steel strings, which can be quite painful for the beginner till your skin toughens up a little(or perhaps the nerves in your fingertips die.. lol!).
That said, I started out with an acoustic for a while, used a classical for a few years, went on to other stuff and now, have fallen in love the the sound of the acoustic(folk) guitar again. In my humble opinion, before buying a guitar, try out as many as you can, do your research(others may have had bad experiences or found something better for cheaper) and use your ears(or borrow your SME friend's one) to get the best in your budget. =)
Hope this helps!
P.s. Also, it would help future posters a lot if you roughly specified your budget range. =)
Cheers!
