Frankly, I'd say get the cheapest one you can find from a reputable manufacturer. A $500 budget will essentially leave you able to afford 95% of what people would consider a "netbook."

I have a 2-3 year old MSI Wind U100 that's still going strong.

MSI, ASUS, Dell, HP. I think those are the primary netbook companies, though I feel like I'm forgetting a couple. I say just get one of those and you'll be set.

On the other hand, if $500 is truly your limit and you're willing to go up to it, probably the best of what's still considered a netbook is the Asus Seashell line, like this one. 12" screen and dual-core Atom CPU.

*edit*
Darn, Mark beat me to the punch on the Seashell