So many good answers so far, just to throw one more opinion into the mix... most of what we consider a "good" set of chips is going to cost well north of $500... and usually over $1000. There are a lot of improvements you can make to your home game with that kind of money before new chips, in my opinion.
Also we don't really know what quality table you currently have. You can usually find big sturdy dinner tables on CL for ~100, and with another ~100-150 of materials and some work, turn it into a pretty awesome table.
Let's assuming someone is starting from the bare minimum, here would be my upgrade schedule:
(starting setup: existing kitchen table, mixed chairs/maybe some folding, dice chips, paper cards)
> new cards (cartamundi are a great cheaper choice)
> enough decent chairs to supplement what you have to make sure everyone's ass/back is comfortable for 4+ hours
> homemade table described above (roughly $200-300)
> china clays ($200-300)... (of course you can skip right to the good chips here if you want
)
This gets you a really solid setup, but without paying a real premium on anything. Then you start to upgrade into the premium stuff:
> real set of chips ($500 - $1000+)
> then either get a professionally made table or a new set of chairs depending on the quality of your current stuff
But no matter what you upgrade, you can't really go wrong. I'm building a table from an old kitchen table and will post some pics soon