A guitar bought new from a reputable music shop should *not* need setting up - the shop should already have done it! But if you buy from Costco or Walmart or somewhere similar, there might be problems. Yamaha is a decent company, but guitars don't always come straight from the manufacturer with things set up properly, and where a music shop will make sure it's OK, Costco will just put the box on the shelf without checking.
Re the "avoiding formica" tip from Don, aim for one *without* any colour scheme - no sunburst or green/blue/purple varnish or whatever. These are often just used to make a crap instrument sell, and the instruments are often just veneered plywood. Ply sides/back are OK, but aim for a solid top. Don't bother with brands too much, bcos a feature of low-end instruments is variability, so just look for one that sounds nice.
"Dreadnaught" is not the only full-size kind of guitar. A dreadnaught goes in very little at the "waist", which tends to give it a louder, deeper sound (at the risk of sounding muddy). The other main shape is the "jumbo" style which has a much more pronounced waist (like a classical guitar), and this tends to give more clarity to the sound (at the risk of sounding tinny). Which to get is personal preference, so your son would need to hear a shop assistant play them and decide which he prefers.
Or another way to start is on a cheapish nylon-string classical. Nylon strings are much easier on the fingers, which is good for starting out, and the guitars tend to be significantly cheaper. After a year or so, he'll be in a position to go into a guitar shop and try out the steel-strings himself. I don't know how things work in the US, but in the UK it's quite common to learn on a cheap classical and then trade up to a proper steel-string - hence there tend to be a fair number of cheap classicals floating around second-hand.