Inexpensive radio recomendations

Radio Hardware Options

We used to use FRS radios. We replaced those about two years ago with Baofeng BF-888 and UV-5R radios. These have proved to be great radios, especially for the price. A word of warning. If buying chinese radios I would only purchase from an American based vendor. Amazon is probably best. If you have a problem you are far more likely to get it resolved with Amazon than with a vendor based out of Hong Kong. Note: due to a name conflict, Baofeng is changing their name to Pofung. Same radios, new cheesy name. 

Baofeng BF-888, UV-5R, and UV-82

This is a super simple "business" style radio. It has a knob for power and volume, and knob for changing channel (it has 16), and a couple buttons. This has been our main workhorse radio and they have been dragged through the mud, dropped countless times, one even fell into a toilet, but none have died. Some have had their antennas die and one battery has died. For about $20 that's a great service record. They are now available at around $15 on Amazon.
Downsides are that this radio requires you program it from a computer using a kenwood-USB style cable, it only has 3 Watts of power output, and it's UHF only. But this radio is even cheaper than Motorola FRS radios and is far higher quality in our experience.
More Info: HamGear review - Miklor FAQs - eHam Reviews -
Where to buy: Amazon

This is the little Chinese radio that took the ham world by strorm - literally in some cases, as it's even sometimes used by soldiers. When it came out it only cost $60 and people were amazed by it. Now they cost about $30 on Amazon.They are dual band, covering huge portions of both UHF and VHF. These things offer a lot of communications ability for a small price. Ours have also proven quite durable suffering loads of falls onto pavement and tile and plenty of exposure to the elements. One of our four radios has had it's microphone die, but it's still in use with a shoulder mic. Another, which has seen the most use, is starting to get a little flaky after two years of constant use. I think all of our units now use replacement antennas - antennas are kind of disposable items.
More Info: HamGear preview, review (1) and (2) - Miklor FAQs - eHam Reviews
Where to Buy: Amazon

This radio is a lot like a UV-5R but in a more durable housing. It also has a much louder speaker and doesn't look as much like a toy. It is larger than the UV-5R, but it's still smaller than a lot of "public service/commercial" radios I've handled. It also has a unique dual push-to-talk button. These radios have "dual watch" and can be set to monitor two frequencies at a time. With the dual PTT button you can transmit on either of your two monitored frequencies without having to switch between your two monitored frequencies. A little odd at first, but I like it. This could be a very handy feature for some operations. 
More Info: HamGear review - Miklor FAQs - eHam Reviews
Where to Buy: Amazon

Other Radios
A helpful comparison is found over at HamGear - he compares a bunch of cheaper Chinese hand held radios.
The UV-B5 and UV-B6 get a lot of mentions - our testing wasn't favorable, but I think our two samples were from a bad batch.
On my list to test eventually is the Quansheng TG-UV2. It sounds very promising at a price of about $85.