I reckon it's a hybrid bike you want. A mountain bike will be too sluggish on the road for you, and a road bike or racing bike won't like the rougher cycle paths (canal towpaths tend to be a bit gravelly and rocky).

Definitely go to a proper bike shop (not Halfords), and go to one where they will not only sell you the bike but set it all up and service it for you, preferably with another service after a few weeks to check everything is in order. You can get a decent Trek bike with your budget and have change for accessories (they'll probably bung a few goodies in with the bike if you're lucky).

If your main purpose is to get from A to B rather than as a keep fit tool then look at the weight. No point in pushing about more than you have to.

If you're thinking of riding to work occasionally, and you work for a large enough organisation, then you might be able to get a bike practically half price - worth asking about.
I'd probably go for a 'hardtail' mountain bike if you're thinking of having a go at some local trails. A friendly local bike shop should be able to help you navigate the jargon. I wouldn't actually get too hung up on the brand, though. There are lots and if you go to a decent shop they'll probably be Ok. Giant make very good bikes in your pricerange. Feel free to post any you're considering. I'm sure there are plenty of us who'd give it the once-over.

...get yerself a rear-view mirror. Being able to see what's coming up behind you (and how near they're likely to get) allows you to plan your manoevers way in advance and can literally be a life-saver. However, avoid mirrors that are too convex as they make everything look miles away right up to the point when it wallops you. Jim Blackburn seem to make the best ones.

buys a decent bike. Specialized or Trek are both good value at that price - £300 gets an aluminium frame with front suspension. I would suggest a mountain bike type but maybe look at having the shop swap the knobbly tyres for a a more road friendly type if you are rarely going off road. Get a little saddle bag, a spare inner tube and some puncture repair sticky patches. And buy a helmet and some gloves for when you fall off.

I use a Marin Novato (hybrid) for exactly the sort of cycling you plan to do, though I try to cycle to work at least once a week. I'm not sure what the price is as it was a 40th birthday present from my wife. I love riding it though.

Recommendations:

- go to your local bike shop - you'll get much better service and they'll sell you a bike that's suitable for you, not one to meet their sales targets.

- I'd agree with Dr Volume and would recommend a hybrid, but the guys in the shop will be better able to advise you.

- if you're going to cycle in the dark or even just in poor weather conditions, buy the best lights you can afford.

- if you plan to lock your bike up in public places, buy the best lock you can afford.

- not sure about helmets. I wear one - mainly to make sure that my kids do when they're on their bikes - but my mate who's an ardent cyclist doesn't. He says they've been shown to be of great benefit to kids involved in bike accidents, but not for adults. I don't know what his sources are.

- I'd definitely buy gloves too, as Leedsboy suggests: fingerless for summer; full for winter. Badly grazed palms can be bloody sore!

- if you get tubed tyres, get the shop to put Stan's No-Tubes in them - it'll cost around £50 but will save you the headaches caused by punctures, flats etc. More info here.

Enjoy your cycling!

I would always wear a helmet now. Whilst unlikely to be much help in a major crash they do offer graze and whiplash protection for small spills.

In the last few years I've come off twice, once without a helmet and the other with. The first, I went over the handlebars, fortunately at low speed, broke my sunglasses, received a black eye and grazes to forehead and cheek. For the second I hit a patch of wet leaves at speed and slid on sideways for several metres. The extension of the helmet stopped my neck muscles from stretching and prevented the obvious impact with the ground.

Agree with gloves. Get out there and enjoy.

you're after what I was looking for...

Went to my nearest Evans branch - really clued up, friendly and not in any way pushy staff.

Bought this bad boy (for a bit of tootling, parks etc) - got helmet, luminous jacket, decent lock and lights on top and it came in just over £300

http://www.evanscycles.com/products/dawes/discovery-101-2010-hybrid-bike...

Very happy with it!

I'm bowled over by all the useful advice. Feel free to keep posting any thoughts. Can't wait to start looking at the weekend...!

Hub gears are great: less faffing around with derailleurs, much easier to clean, less to go wrong.

Experienced bike shop staff are invaluable for getting you the right frame size, seat height and so on. And they are susceptible to requests for discounts off locks, lights and other gear if you stress the money you're spending in their shop.

Being visible and assertive will benefit you more than a helmet. There is anecdotal evidence that motorists are more careful when passing un-helmeted cyclists than those with lids; and that there is a tendency for cyclists wearing helmets to take slightly more risks. More on that story here.

...or fourther, or whatever. A hybrid will be comfortable and nippy and all manner of just right. And yes, go to a decent-ish bike shop (although personally I'd include Evans in that, not sure if this is a popular opinion...)

Followed your wise words and visited a few proper bike shops. The third one I went to was brilliant, spent loads of time with me and let me take a couple of bikes out for a spin. Ended up with a Marin Larkspur, spent more than I planned but worth it in the long run. Picked it up today and if the weather holds I'll be off for a short ride this afternoon.

Thanks again for all your help.