A phase generator works fine for most hobbyist type lathe work. You can still cut fine with them and the accuracy is not affected. Downside is cost, phase generators are expensive, and not very efficient so the light bill can get nasty if you run it a lot. 3 phase lathes are cheaper though, as there is less demand for them. When a single phase 10" lathe comes up for sale it usually leaves in a hurry.
Price is a subjective thing. It really depends on condition and what goes with it like bighammer said. Add 15-20% to the price of a 3 phase machine if it is a single phase machine. For a bare lathe in working condition they start at about $500. For one with a good quantity of tooling and accessories in very good condition you can pay over $2500 easily.
Southbend made a decent machine, LeBlonde was a bit better and THE BEST manual lathes are those made by Mori-Seiki. There are 100 brands of lathes, you get what you pay for, just make sure it will do what you need it to do.