Check out the RapidAir piping systems, and also do a search on this site; there are hundreds of existing threads on this general topic.
The under $1000 compressor would be a single-stage 3.3ish horsepower (formerly labeled as "5HP" until a class-action lawsuit shut down the spec-stretching) 60 gallon compressor with a splash-lubricated cast iron (deadens the sound much better than than aluminum) pump. Get the best deal you can at any local box or farm store. If you can find one new for under $400, heck, buy two!
The $2000+ compressor would be a true 5HP 2-stage 80 gallon compressor. This hits the ball straight into center field and will meet a vast majority of air uses for a home or even commercial (non-body-repair) shop.
Note: Sustained use of high-volume continuous-air tools (grinders, sanders, etc.) or a large sandblasting cabinet may even require a 7.5HP unit.
As stated above, it really depends upon what air tools you intend to use, and for how long of a sustained period. For a few minutes at a time, with time in between for the compressor to recover, the first option above will work. For anything longer, the 5HP 2-stage recommendation will be your minimum size that will make you happy.