Agreed, but the XTi is a known commodity and are starting to drop in price now that the XSi (450D) is out. You can get a new USA Warranty body for under six bills. It has enough resolution for 300 dpi enlargements up to 20x30 and more features than most amateurs will ever want or need. Plus, it gives you the ability to use any Canon EOS or EOS-compatible lens, including the incredible Canon L-Series.
The kit lens won't win any resolution contests but it's fine for generic snapshots. For the price the Tamron lens is no slouch, either. In testing it does very well for everyday photography. Besides, they are stand-ins until enough pennies can be saved for better glass.
For his price point it's a pretty good setup. More than enough camera body to satisfy even hard-core amateur shutterbugs, and the ability to grow into better glass when experience and finances allow.
Of course, he could also picked up a lightly used (or maybe even NIB) 300d for $250-300 and blow the rest of his wad on a single spectacular lens like the 24-70 f/2.8L. Pick up the Tamron zoom to fill in the upper zoom range and then start saving for a Canon 70-200 f/4.0L or /2.8L.
Brad