As a recent newbie (well, someone returning to cycling and not very knowledgable) I think my experience may help.
I wasn't sure what kind of bike I wanted, I guessed a mountain bike as I like to do cycle trails a few times a year, but primarily wanted something for general running about and some commuting. My first thought was to spend a maximum £200 on a new bike. I figured that would get me something OK!
Having visited one local shop I sought advice here and elsewhere. I quickly realised that I would be better off spending a bit more, especially with the sales on at the time, or buying s/h. Like you I was worried buying s/h as I didn't know enough to avoid potentially buying a pup. Buy a decent bike and you'll have it how many years? Factor in the savings in petrol/fares by using your bike and you can soon talk yourself into spending more. Don't forget to allow for stuff like lights, locks, some basic tools, spare innertube, helmet etc.
In my case I read up on single speed bikes and decided I really wanted to try one. Take a day out to go round as many bike shops in your aread as you can, I visited quite a few shops and have to say mostly, the experience wasn't great, staff generally dismissive and/or trying desperately to flog you a particular bike for double what you said you could spend! I did learn something from each shop/conversation and it helped me decide on what I didn't want. A few were really great, very helpful and friendly.
I was ready to buy in one shop, saw the bike and eventually got someones attention, and the guy there really did his best to put me off the idea, told me to take a brochure and come back when I'd decided what other bike I'd like!
I'd been 'watching' a few bikes on
ebay (only local sellers so I'd be able to check the thing out and collect in person) and returning from that near purchase experience, a Kona Paddy Wagon was about to end so I put a bid in and won it! I managed to pick up a bargain as it has some nice upgrades fitted and everything was in good condition - but I'd advise you to research the bike a bit more first! Downsides of buying s/h are that you might need to replace some basic stuff much sooner, tyres might be a bit worn, cables, brake blocks....
I would definately suggest buying locally to try before you buy, or some internet dealers like
Evans and
Wiggle offer free trial periods on certain makes, so you can return the bike even if you've ridden it about for a couple of weeks. But it's hassle all the same.
I like the single speed idea, simplicity etc., as long as you can manage without gears where you are! I'd feel pretty confident buying a s/h bike from a forum like this, something owned by an enthusiast and probably upgraded a bit too.
Another thing I'd recommend is Evans Fix It course (assuming you can get to a branch). It's a free two hour 'course' on basic bike maintenance, really useful for newbies!