It costs more than $500, but I love my Canon HV20. 3 Megapixel chip, shoots in HD. 10x optical zoom. 24p Cinema Mode. Shoots still pics with ok quality.
It replaced a Sony DVD-403. I far prefer the flexibility of the HV20's digital tapes, and it works very well with iMovieHD -- I just plugged it in, pushed one button, and it pulled the video off of the camera.