Which guitars should I look out for?
It depends what you're wanting to pay, and how much cash you've got. If you want to play blues or lighter rock, perhaps look at getting a Squier. If you're a rock / metal head, maybe a lower end Ibanez. Have a look at GAK.com, it's a brilliant site for guitars.
How much does a E-guitar cost?
It varies. For top of the line stuffs you're talking thousands..... but don't worry, for a beginner, and someone who's looking for something basic to start with and thrash around... you should be able to get something for under £200. Maybe even one of those starter packs that comes with an amp and cable etc.
Do I need to be able to read music notes?
Not standard, proper musical notation, no. You'll learn tablature, the guitarists own musical laguage. It's damned easy to pick up, anyone can read it once they know what represents what.
Good internet sites for learning?
www.justinguitar.com. Brilliant, completely free lessons by an amazing teacher. I swear by this guy, his videos and lessons pushed me to keep going and playing when the frustrations were building up and I nearly called it quits. His stuff is clear, concise, and usually with a hint of humour. It's fun learning with Justin...and it really, actually is. Go with him.