Have a look at Crafters. The better Corts are good (Parkwood?). Walden make some nice OM styles. Blueridge make cool prewar Martin copies. For really cheap, the Johnson Carolina guitars (might be Recording King brand in the US) are good too, a decent OM28 copy for NZ$700? Oh, yes! For that pre-war blues vibe there's the Epiphone EL-00. I'd take any of these guitars over the "formica" Martins. Go for at least a solid top.

Any low(ish) end acoustic is easily cheered up by the addition of a properly cut bone (or Tusq) saddle (and nut, but do the saddle first). A small upgrade cost which easily pays for itself in performance improvement. I wouldn't get hung up on electronics either, a good small Korg tuner will cost less than the premium for a preamp with internal tuner and it'll work better.