Before you buy any bonds / bond funds, especially any US gov't issues, you should read Bill Gross' June newsletter:

http://www.pimco.com/LeftNav/Featured+Market+Commentary/IO/2008/IO+June+2008.htm

Personally, for investment grade fixed income, I generally recommend buying individual issues in a laddered portfolio.  It's easier to control your duration and costs this way.  The economics are more reasonable for funds dedicated to foreign and high-yield fixed income.  But, as a previous poster suggested, the outlook for junk bonds is not particularly good right now.

 Interestingly, Bill Gross mentioned in a recent interview that he was buying big money-center bank issues, which have been beaten up recently... like Bank of America.  I've seen some pretty attractive BofA issues lately. 

But, whatever you do.... stay short!  Gross recommended not going out even 5 years.  And I concur.  The average duration of the portfolios I manage are currently just a tad over 2 years.

Good luck!