It’s not $333 some magical dividing line, and budget printers can be perfectly fine, but Epson just doesn't have many models in that specific price range here in the States. If you need an all-in-one, go for it—but we all know the rule: fewer moving parts means fewer things to break. 😬
Yeah, the size constraints are a pain, but that's just the reality of it. There isn't much we can do about that part...
There are plenty of options out there. I've used both Epson and Canon, and you can always find cheap compatible ink for either; you just have to do a little homework on user reviews so you don't get burned. Personally, I've had great luck using Epson ink for both my Epson and Canon machines.
This little guy you linked is... well, he's not built for heavy printing, and you'll probably go broke just buying ink. It's a total hassle that it uses a single cartridge for the CMY colors; once one runs dry (and it's always one specific color that dies first 😬), you're stuck tossing the rest of them...
Honestly, I'm at a loss for what to suggest when your space is that limited. You're basically forced to hunt through models one by one and check the dimensions. There's no shortcut...
EDIT:
I just stumbled upon this one:
I'm not sure where else to find it besides Amazon (though I assume Canon USA should carry it), but the dimensions are 145x390x300 mm. It uses individual ink tanks and even supports a CISS setup.
http://www.expertreviews.co.uk/print...-xp-422-review