Tough call here, but $20 is only a very slight difference; I'd go for the 505. One thing you might want to consider is the ergonomics of the device; i.e., which one feels better in your hands and is more comfortable for your reading style. While many people complain about how the cover is attached to the 500, ask yourself how often you'll be removing it; i.e., never, unless you plan on buying a new cover (the original is more than adequate, in my opinion).
Of course you come to the other, more pressing, factors as well; more internal memory, better grey-scale rendering, and the ultimate, a next-gen screen compared to the PRS-500. I am more than happy with my PRS-500 for reading books, and I believe it will last me until a new device rolls along that has a larger screen; so I won't be upgrading to a 505 anytime soon, unless it's given to me.
Try some more in-store test-drives to see which one fits you better, especially in real-world usage. Good luck!
