I have two boys, 3-years and 5-months. People have given us some expensive stuff, Polo, Oilily, Jane & Jack, etc... but most of the stuff we buy is inexpensive.
I can't see spending a lot of money on clothing when they're just going to outgrow it so quickly.
Places like Old Navy, Baby Gap, Carter's Outlet, Disney Store Outlet and Costco are fine for now.
Our most recent purchase was two pairs of kid's Levi's at Costco for $9.99 each - size 3T & 4T (he'll grow into the second pair).
Also on shoes, we always wait for the 2 for 1 sales and buy two pairs (one a size up). Right now my oldest is wearing Elmo Sneakers, but he's got a nice pair of Nike's waiting for him.
I have bought a few cool shirts at a kids boutique I found here in town, but I haven't paid over $25 for any one shirt.
The other thought is kid's re-sale shops. There are a lot of those and you can let someone else pay the full price for clothing and then buy it "lightly" used.