What do you consider a "good" song selection? Most systems that would come with songs would come with like a 100 pack of songs or less. I would be wary of anything that comes with much more than that in the price range you gave, as the songs would probably be either illegal or crappy MIDI versions.
Anyway, check out this system ($205.00)
http://www.provantage.com/emerson-ixt-k ... MKX00R.htm
Then, check out these wireless mics to go with it ($39.99):
http://www.amazon.com/Nady-Handheld-Wir ... B000N5YEDG
I personally don't have any experience with these, but there are dozens of people on the forum that swear by these things when it comes to inexpensive wireless microphones.
That's a decent little home system for about $245.00. Then spend all the $$$ you want to buy a few CDG song sets. Good deals on E-Bay and karoake.com. For a few good bank-for-the-buck base song sets, I'd go with the SUPERCORE set, which is about 180 songs for about $24.99 and Sweet Georgia Brown, which is about 1000 songs for around $60.00 (check Ebay for the best deals on these), then fill out your newer music with a Karaoke Kurrents set ($69.99):
http://www.google.com/url?sa=t&source=p ... GdJeAj1dPw
That would give you everything you need, with about 1350 songs from classics to currents for about $400.00 plus shipping.