What should I buy?

Hi to all- My son and I started to play guitars after I found several at yard sales, all of them electric. He bought an acoustic at a flea market in Manhattan and liked to play whenever he was feeling lazy. It is an Epiphone by Gibson and I guess a beginning instrument. Now he would like to upgrade to something more intermediate and I would like to surprise him for his birthday with an acoustic/electric guitar. I'm more than a little overwhelmed by the huge selection out there. I would like to stay under $350, but want something that we would both enjoy (I pick out tunes and he rocks). Thanks for any suggestions!