I found the website to the $195 kit that you're talking about I think: http://www.fermentationtrap.com/5612.html
That's a 5 gallon Mash/Lauter Tun (MLT) and a Hot Liquor Tank (HLT), not an Mash Tun and a Lauter Tun. I might be wrong but is that the kit you're talking about? You don't NEED a HLT, but it makes life easier.
I'm new to AG, and have both an HLT and a MLT, and find them both to be very useful for fly sparging. My HLT isn't fancy - it's just an old rectangular cooler that I put a ball valve on (about $15-20 for parts) for gravity-feed fly sparging. Check out the wiki http://www.homebrewtalk.com/wiki/ind..._to_a_mash_tun
on how to put a ball valve on a cooler and then (for the MLT) add a manifold or false bottom. If you're batch sparging you probably don't even need a ball valve on the HLT.
At those prices for a 5 gal cooler setup I'd seriously think about making your own.