Let me add +1 to the accolades for the Trek FX series. After a few mods, I am head over heels in love with mine. It's a great all-purpose bike for a decent price, IMO.

I'm 5'5" and I have the 15" Trek 7.2FX WSD. The frame fits me really well, but I do have to have the seatpost extended to its maximum. Take your friend's bike for a spin and see what you think. It's probably too big, but ya might get lucky -- ya never know.

Whatever you decide, congrats for getting out there and riding!