Newegg has the Canon EOS Rebel XS 10 MP Digital SLR Camera with 18-55 mm IS EF-S and Canon EF-S 55-250mm f/4-5.6 IS Lens for $559 + $10 shipping = $569 shipped. 
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I'm coming up with $560 after rebate at Amazon. Actually $559. Same lenses.
If you can afford it spend a little more and get the T2i
Agreed with #2. As an alternative, you can also check Canon's referb stock.
Or refurb stock.
Whichever gives you the better deal.
if anything look for a deal on a T1 if you cannot afford the T2
Agreed, the T1i is light years ahead of the XS in terms of features.
If you can't afford the T1, check out the T.