I grabbed a gorgeous white (faux) timber toddler bed from Target on sale for $79. She still has plenty of room in it, it uses the same mattress (so all you'd need to do would be to buy a new mattress for the new bub) and the bed is close to the ground.
DD has been in it for 5 weeks or so and loves it! We were going to go the single bed option but couldn't find one we really liked plus they were all $300+ inc mattress. then we would have had to buy sheets etc. This way we only shelled out the $80 and just use the stuff from her cot.