I do web development work as well. $1k, isn't much for a full site, so I'd be careful there. Also, the $3-$5k quotes seem really high, unless the functionality needed is more advanced then described. In general, I charge $1,500 for a basic, informational site and $2,500 for an e-commerce site. It sounds like the site in question is somewhere in between, so would think that ~$2k is a fair price.
As far as hosting, it depends alot on your needs, but you should be able to get away with paying between $10-30/m (though, I'd go direct and not host through a 3rd party).