Check out www.hidatool.com. I picked up an 8" Santoku for like $35! It's a bit thicker than some of the other Japanese stuff, but takes a sick, wicked sharp edge! It makes a great intro knife since it will take more abuse that some of the more expensive cutlery. Not all of the Japanese stuff is $4k a knife, most of my collection were between $100 and $130 each. A 9" chefs/Gyuto, and a 6 or 7" Nakiri, and maybe a small paring knife will take care of most kitchens needs.

The waterstones are really neat as well. They break away as they get used, exposing fresh abrasive, but the stuff that breaks away forms a sludge or slurry on the stone, that continues to polish. My highest stone is a 6000 and it gets stuff stupid sharp; the stones go up to 12,000!!! I will often finish with a 2000 grit Shapton waterstone, works for 99% of the sharpening needs. It's scary when you get cut and don't even know it until you see the blood, and still don't feel it! I've tried to bring Henkels to this level of sharpness, but the steel is just way too soft and deforms quickly. The sharpening is strangely relaxing, you get into this groove and find that 2 hours went by as you were polishing the edge to a mirror sharpness. Many Japanese blades will come partially sharp as each chef likes a different type of edge, thickness, etc.