Eternal - a lot of people like the Yamaha Pacificas for a cheaper electric guitar. Has a nice sound...kinda similar to a strat sound. Single coil pickups of course.
As far as the amp - I own
a Line6 Flextone II XL....and I am not that happy with it. let me clarify -
I've played gigs with it...and it sounds pretty good (I am in a rock band...but we don't use that much distortion...so, i mostly play with it cleaner) It's easy to get a nice blues/distortion sound...or a nice clean sound. And, hell the crunch sounds pretty good. If you have a Line6, you will want the floorboard...which is gonna hurt your bottom line.
So, for a live amp...it is pretty decent. And definately versatile. Also for a practice amp it is nice...becuase you just turn it on and go.
Now the downside, and this is a BIG one. Since you are at homerecording.com - i guess you want to record that amp at some point? heres a run down -
1.) line 6 is designed to sound like the guitars you hear coming off of CDs. That nice EQ'd sound.
2.) The guitar sounds they get on CDs are NOT how the actual amps they record sound raw.
I have tried to record my Line6 for rock music...by amping the cab...and it just isn't right. It already sounds EQd...its not in your face enough....i dunno. I have tried with several nice mics...etc, and all I can say is that a Line6 sounds good when you are listening to it - but not so good when you record it. I have also tried using the direct XLR outs...and I don't care for that result either...I guess it sounds better than mic'd though.
In conclusion - for gigs etc, line6 is a good value for your money. And...if you are an "incubus" type band...you are going to need the effects and versatility it offers you.
If you are a *real* rock and roll band...like say...the strokes - look at the amps they use. Small tube amps, they mike them on stage and in the studio. Check out the 30watt Marshall tube amp...that little guy rocks my socks off...in the studio and on stage. however - with the marshall you get 2-3 sounds, a world class clean...a world class mild "bluesy" rock distortion, and a pretty good heavy distortion.
The blues Jr. reccomendation from earlier is good too...great little amp. I played a gig with one of those once and was duely impressed.
I assume you are gonna be recording - so...my advice is check out a small tube amp over a line 6. you can crank it and really drive the tube...stick a mic in front of it and experience bliss.
good luck,
-wes