To answer the OP: The difference between what your ISP quoted you and what the phone company quoted you is most likely due to your ISP paying the line provision for you. When you get DSL, you get a line provision from the telco, and you buy access from a Global Service Provider (GSP). In some cases, your ISP charges you one fee, and pays the telco for your line provision. In some cases, you pay the telco for the line, and your GSP for access seperately.
The telcos use this to pull off some shady deals: For example, in the market my company serves, Qwest (pronounced Q-worst) is rolling out DSL and claiming you can get 640K down/256K up for $29.99/month for one year. This is simply not true. What you get is a line provision from Qwest for that price, and three months of free Internet access from MSN - after the introductory period, it’s $22.95 - $49.95/month, depending on the level of service you select. But they don’t tell you that up front.
As others have pointed out, if you have to choose, go with a cable provider. If you must get DSL, go with any ISP you can find that isn’t affiliated with the telco, even if it costs more. Most ISPs can deal with the telco more effectively than you can as an individual. This is important for fixing any of the many, many issues that can come up with DSL.
Of course, if you’re lucky enough to have a local provider offering wireless service, you’ll probably find it much better than either cable or DSL. Especially if you live anywhere my company serves. (/blatant plug)
So why is DSL so much better in Japan and Europe? Population density. It’s easy to deploy a high-speed network in an area where lots of people live - US cities tend to be more spread out, and the cost to get 7-20Mbit service to those areas is much, much higher. And, to some extent, the telcos are charging what the market will bear.
The “deregulation” of the telcos left us with the worst of all possible worlds: instead of one monopoly, we have many, none of which are interested in actually providing quality service. Which is why some providers are skipping the telcos entirely and going with fixed wireless. Heck, around here, the phone lines barely support 28.8K modems, much less 56K or DSL.