It could indeed be about how much 'flavour' you want in the sound. The way I see it there are a couple of different parameters, flavour/character being one, instrument quality to me including how balanced the strings are, intonation/fret placement and such, another. You can get flavour on its own faily cheap second hand in worn in wood. Instrument quality on its own costs a little more, and to me sort of starts around your budget. Getting both together gets as expensive as you like.
I went around the houses to find I prefer a decent instrument with loads of the right flavour to a 'better' instrument with less character. Went from a fairly fine $2200 guitar that sounded stellar to an old 70's Giannini from ebay for £100. Love it! Records better too! As in less impressive and mucho more musical. No more fighting to cause character with recording gear, just capture it. I also found a totally random supercheapo, which I liked the sound of but was untuneable due to the dirt cheap fretboard having frets in all the wrong places, gave it to a great luthier who slapped a nice ebony fretboard on there for £250 and voila= vibe plus intonation/feel........
Obviously depends what you do with it. For full on classical my approach wouldn't really roll, but if you do latin you could do far worse than check out Giannini guitars. Go to their site and check the players.....and while you're at it, buy their classical strings, for the magically wooden humming bass strings (trebles are better from Aquila

)........