i'd like to start biking through out the city and start off with a decent used bike for under ~$300

what should i be looking at? what types of models are optimal for riding through the city? i was looking at something like this:

http://newyork.craigslist.org/brk/bid/4478829404.html

but a friend of mine said that it was wayyy overpriced. suggestions? i'd like to buy something that is good for the roads but that will stay together for a decent amount of time.