Hi Jody,
The S500 didn't just lose out on price, but on functionality - for example, the lack of an ethernet port (and therefore upgradeability) is crucial for a format such as Blu-ray that's still evolving. And it still doesn't support all the HD audio formats via HDMI - just not on for a dedicated player.
If you're not interested in the gaming, internet and other capabilities of the PlayStation 3, i'd hold fire on Blu-ray for now - we saw many new budget-but-full-spec players announced at CES last week, and now HD DVD seems doomed, i predict many other manufacturers jumping on the Blu-ray wagon and increasing choice and quality.