Another vote for shimano spuds - I have got a pair of MTB XTR pedals on my road bike, and XT I think on the mountain bike - picked up the XTRs brand new for £40 (normally over £100).
If you dont want you shoes to look too bikey then how about these MT52 shoes:-
Good sole on them for walking in, so you won't look like bambi on ice when off the bike.
Every now and again Aldi (or is it Lidl?) do bike gear, including SPD shoes cheap and not bad quality. Last year I picked up a pair of mtb shoes, two pairs of thermal leggings, two long winter jerseys, and a jacket for £75
