Picking a camera to use in your photo booth will probably be the most important decision of all, as this will affect the quality of your pictures the most. If you're looking for really crisp, professional-looking pictures, then a DSLR is the way to go. Although it might not sound like it's exactly keeping in with our "photo booth on a budget" theme, you can do this for less.
You can pick up used DSLR cameras on Ebay for less than half the price. You may need to check in from time to time to try to scoop the best deal, but it's perfect, as most DSLR's — especially from brands like Nikon and Canon — are very robust and last for years. Getting a used DSLR will do the job and cost you much less. (Extra tip: if you buy from the aforementioned brands above, you can also pick up many used lenses for them on Ebay too; a 50 mm. lens is going to give you that beautiful blurry background, but a 24 mm. one is going to make sure you get everyone in the shot.)