As a music teacher (not fiddle) and a learner (of fiddle) this is one of the hardest questions to give advice on. Of course, you don't want an instrument that isn't well made and easy to play. On the other hand, you don't want to spend money that you wouldn't get any benefit from.

I went with a starter instrument from Stringers in Edinburgh (they are mainly about classical string players, but with the number of folkies in Edinburgh they know what they are talking about there too). For about £80 plus postage, IIRC, I got a Chinese built fiddle with a decent case and a bow. Bow and fiddle were set up and the chap I was taking advice from was pleasantly surprised at the quality (and that is what he had advised me to go for). The violin itself is pretty decent, well set up and the original strings lasted for ever (sadly, no-one knew what they were!). The bow is probably the weakest link and I'm thinking of a better one, but a slightly better bow isn't a major expense.

Cheers,
Calum