Samsung Galaxy Ace. But have slow and old processor. Or Motorola Defy+ but camera is simply average. Else Sony Xperia Mini but touchscreen is just 3" but packs more power than Defy+ also.
Stay away from Ace please. The chipset which ace uses msm7227T is ancient and has no future at all. Rather get the HTC Explorer if you want to stay at 8k. It has a newer processor will be better suited for newer android flavours.
Above that the Xperia mini and the Defy plus are good choices. Of the two I'd get the Defy plus since its got a good community support and is rugged with a bigger screen.
If you are willing to spend a little more, you could get the Sony walkman live which IMO would be the best option bordering a little above your budget.