My flatmate uses a HTC Wildfire which is quite cheap, runs android 2.2 and is pretty fast, I'd recommend it for a budget android phone. Only letdown is it's tiny screen.
I myself use a HTC Desire HD, which probably isn't in your budget :p
Not sure what Android version or screen resolution you're after, but search www.t-mobile.com for "T-Mobile Comet Black Prepaid". Refurbished devices are going for $99 off-contract at the moment.
Xperia x8. Custom 2.2 rom on it (Floyo). There's a 2.3 rom available apparently but I think it is still buggy.
I'm considering getting the Xperia x8... do you have any feedback on its hardware? Anything particularly good/bad about it?
Adobe gave me a Samsung Galaxy S, and I've been playing around with that.
I'm using the Nexus S, on stock Android 2.3. Does the job for me.
How is HTC Wildfire? It's coming in 12k INR.
10000 Indian rupees = 225.5810 US dollars
Motorola Atrix, Android 2.2
HTC desire. Extra advice. eBay.
Extra piece of advice. Buy a nexus one. Or galaxy s. The latter might be too expensive even on eBay but look hard. You might be surprised. I got my desire last year June (i think) for 400 dollars