Hey there,
Basically i'm starting to look into the acoustic guitar market to upgrade from my current one (more about that in a bit) for something in the range of £300-400 (UK)

However my current acoustic (and first) is a Fender DG5 which I bought from a friend a good few years ago, but one of my major gripes with it is that it's something I have to wrestle with, especially with fretting notes which although obviously requiring more of an effort than an electric, seems to be rather poorly constructed with very high action and an unpleasant quality to it. I did however read somewhere that cheaper acoustics can be like this and if you get a decent one it's more playable and pleasant to use.
The question is, is that idiom correct and is my prospective budget enough to get a decent-ish guitar; much like the electric guitar market being quite forgiving with its range?
Yes, when looking at guitar in that range you should be able to find one with all solid wood, that is setup nicely. Even if you find a beautiful sounding guitar that has high action, you can have a luthier set it up for pretty cheap.
i bought a hudson acoustic for £50 (reduced from £100) it's setup really nice, action is just right, no fret buzzing, sound's really nice when playing chords or finger picking, i cant really complain about it, the best guitar ive got!
yesh that is often correct and yes your price range is sufficient.