There are plenty of restaurants in Dili, from local, Italian, Portuguese to Australian.
Timorese and Indonesian warungs, where you pick your food from the window, are everywhere and cost $1.50-$3.00 for a typical meal. One of the most popular is on the road from the Cathedral to Bairo Pite - look for the blue and white decor and "nasi campur" written in the window. Pick from tasty fried chicken, shoe-leather(とても堅い)rendang or egg, then add a couple of vegetable dishes. $1.75 including bean and cabbage soup (koto) and iced tea. (http://wikitravel.org/en/Dili)