Its definitely not the best time ever to pick up a new macbook. As you have gathered, the 13" is not running the latest Core i5 chips. I have to take exception to the other posters in this thread, every benchmark that I've ever seen has shown major improvements from Core 2 > i5. And I just helped someone buy a Core i5 laptop for $550 a couple weeks ago.
The primary redeeming quality of the 13" MBP is that its running (relatively) powerful nVidia integrated graphics, whereas any cheap Core i5 laptops you'll find right now will only have Intel integrated graphics, which is considered much worse. Its possible that you'd get bottlenecked by the Intel graphics (instead of nVidia graphics) before you would get bottlenecked by the Core 2 (instead of Core i5), so the 13" MBP has that going for it.
The 13" MBP is just a very well designed laptop. Its thin, has a very stylish all-aluminum enclosure, has a backlit keyboard, webcam, mic, and a good selection of ports and wireless connectivity. I really like the keyboard and the trackpad is the best I've ever used. It also has great battery life maybe 4 hours of real world heavy browsing use after a year of battery degradation, which is over double most other laptops.
For me the bottom line is that a few other companies make lines of laptops that are as well designed as the MacBooks (Sony and Lenovo Thinkpad come to mind, but I think that most major brands now have comparable high end model lines), but by the time you buy those they cost about as much as the MacBook. The sort of "commodity" computer where you can get a Core i5 for $550 is going to be plasticky, relatively thick, worthless battery life after a couple years, little attention to ergonomics and design, etc.
So yeah, your choice.