I highly recommend a set of Adams Tight Lies irons to start with. You can probably get by on last year's model for $200 to $300, and they are great clubs. I gave my old set of Tight Lies to my nephew, and I hit them at the range with him over Thanksgiving. I still hit them very well, and they have several hundred rounds in them.
And also, don't think you have to spend it all at once, either. In fact, I would highly recommend upgrading whatevery you need the most right now. Put in a few rounds to get used to that new club(s) before moving on to the next item that needs to be upgraded. Every piece of equipment I have ever purchased has had at least a slight learning curve, and hitting the course with all new equipment could be quite frustrating.