^^^The $2.49 first series Skylanders are a great deal for the average player. The only difference in-game is that the Series 1 Spyro's Adventure figures don't unlock the challenge stage in Giants and can't use the new Giants Wow Pow attack. If you have Spyro's Adventure though, it's the same challenge stages.
The Frito Lay Skylanders minis are NOT playable at all. They only act as an item and all they do is follow you around. It's 100% for cuteness, and damn are they cute!
A cheap way to get one of each element are:
Spyro (Magic), Trigger Happy (Tech), & Gill Grunt (Water) - come with Spyro's Adventure
Cynder (Undead) - comes with Giants
Stealth Elf or Stump Smash (Life) - very common and very cheap
Prism Break (Earth) - by far the most common earth figure
Eruptor or Ignitor (Fire) - The first is very very common, but the second is a far better character
Sonic Boom or Whirlwind (Air) - Both very common and cheap
I like Hex (Undead) and Double Trouble (Magic) which are both pretty common.
Terrafin is arguably the best character in the game. He's uncommon, but not rare. Once fully powered, he has some almost gamebreaking attacks and can dodge pretty much any damage.