I have a friend who's buying a puppy from these folks. http://lucky7labs.bravehost.com/
$500/pup, but seems like a heck of a deal, they come from great looking bloodlines, they have shots, dew claws removed, microchip, and if you pick a name by 5 wks they gaurantee it will sit, come when called by name, be house trained, and will fetch toys. Can't beat that. Last I heard they have one female left in their current litter which is a couple weeks old.
As for cheap dogs being crap. Well for the most part I would agree with your friend. However, I got my dog for free, from a neighbors in-laws. She is full blooded, mom and pops had papers, but the litter was sort of an accident and they weren't breeders and didn't feel like messing with selling them so they were giving them away. I told him I wanted one and he brought me her. Call it luck or whatever you want, but she is one good (FREE) dog. However, she had some good bloodlines.
If you can hit em, Karmin can get em. Once there down, just say back and watch her go!