They say weight lifting at an early age can stunt growth. I got a chemistry set and a Radio Shack electronics set when I was young. I thought they were both great.
I also liked my Radio Shack remote control hover craft, but it's never as cool if you can't take it out on water somewhere. I was never big into remote control toys, but that hover craft was great. I checked froogle.com and found a couple of them for pretty cheap (under your expected budget).
I don't know if ya'll are the outdoors type, but I've always liked camping. I got a tent that I really liked. I still keep it as a spare. It'll do no good if you never use it, though. If you get the tent, make sure you also have a weekend already planned to use it. This is certainly the right time of year for it. You can find them at Sears ranging from $20 - $200. Here's a fancy one for half off at Sears...
Good tent at SearsIf he's the type that likes making stuff, perhaps a beginner's set of power tools are in order. I mean 12 years old is junior high. He won't be little anymore. You'd have to supervise, of course. Home Depot is having an online special on their Black & Decker Multi Tool kit. I was having trouble with the link. It's one base with interchangeable heads. You don't need anytghing fancy for a first set, anyways.
I always liked giving and receiving intangible gifts. Think about concerts and theme parks - that sort of stuff.
Whatever you give him, though, make sure it's something that HE wants and not something YOU want for him to have. My dad has always had a hard time telling the difference (until I started asking for power tools).