First off, a number of games distributed through Steam went free to play recently, so I would start with those (look at the Genres tab at the top of their store page for Free to Play; they pay for themselves by peddling in-game items and extra content). There are also a number of demos downloadable and playable through Steam (Demos tab). You can decide from playing whether they are worth your money or not. Team Fortress 2 was probably the most prominent game on the free to play list, and the demo for Osmos included the first third of the game.
Second, Steam does lots of specials and sells a lot of games as bundles or "complete packs". For instance, all of the Valve titles (Half Life 1 and 2, Left 4 Dead 1 and 2, Portal 1 and 2, and several others) are bundled as the Valve Complete Pack for $99.99. I would hold off on buying any of those games individually until you have saved up enough to buy them as a bundle. I don't see anything on special today that I would recommend, but specials change daily, bigger specials are done on the weekends, and huge specials are done every couple of months. There should be some really good prices on higher end A-list games and complete packs during the Christmas season. Being included in a bundle is usually listed on the game's store page, although sometimes they bundle a bunch of indie titles during the bigger specials.
For the money, I am still playing Terraria, which starts at $9.99 (I've seen it as low as $4.99 on special), and has pretty decent replay value. You can also play on-line with friends.
Also, I got a lot of play out of Plants Vs. Zombies ($9.99, part of the PopCap complete pack) and I didn't care for most of the other titles in PopCap's library. It is a casual, cartoony tower defense game.
The Fallout 3 Game of the Year edition is $29.99 (I picked it up for $9.99 during the "Summer Camp" specials they did recently; it is also part of the Bethesda Complete Pack) and includes 5 DLC packs. The Elder Scrolls: Oblivion Game of the Year edition is $19.99. Less shooter and more swordfighting, though.
I'm also partial to Star Wars Jedi Knight II Jedi Outcast, and Jedi Academy. $9.99 each or bundled together with some others in the Jedi Knight Collection for $19.99, although there is a bigger Star Wars Collection.
The question is, do you want to get some games so you can start playing right now, or build up a library to last you for a while? It sounds like you are operating on a tight budget but also want to get to playing. You're getting some nice recommendations on this forum so far; I'd start downloading some demos and see what looks good to you.