Actually, some Ovations don't sound that bad. Ive seen them used by Seals and Crofts and Kenny Loggins, with mics. They seem to work well with dynamics, like SM7 and Sennheiser 421. They don't sound good to me through condensers.
For mic'ing acoustic, I've tried a lot of mics, and still have found nothing that beats an old Shure SM82 line level broadcast mic. I swear it is the easiest mic to use I've ever played with. It's just a great mic that nobody ever used for music, because it was line level, and it lurked in the remote kits of war correspondents.
I saw one on ebay recently for about $200. It's a great acoustic guit mic, and many other things, but you need a phantom power supply to feed it, and line level ins on your pre. In a pinch, of course, you can run the mic right into your sound card or recorder, it's already line level, but you'll need to adjust gain somewhere.-Richie