$799 for a 12" dual USB 500MHz iBook is an excellent price. My girlfriend and I were lucky enough to find a similar deal at our local MicroCenter some months back. They had the same one you're talking about, as well as the 15 gig 128 MB RAM version for $899. We opted for one each of the bigger models, rather than try to share a Powerbook (which I was looking for at the time) and saved money in the process. Once they sold out, the 700 MHz versions were launched and the price jumped back up to $1200, right about where they are now. Granted, it's tough sometimes to go from my 22" monitor to that little screen when I leave the office, but I couldn't be happier with it.
My advice: Get that iBook before they sell out and pick up a 512 MB chip from someplace like OWC for $125 and you'll be very happy indeed.
That's my 2 cents worth.