I'll echo Harry's statement of support for the Cybook.
Having owned th PRS-500 and Cybook and used the 505, I definately suggest getting the Cybook, for the expanded functionality. Still, I'll put down the Plus's and Minuses's for each (in my opinion)
Cybook Gen 3
+ Font Support - You can add any TT font, which add a lot of flexibility, especially if you read foreign languages.
+ Font Sizes - 12 sizes, which is great. I've often been frustrated by the 3 sizes in the sony, especially in converted books.
+ Mobi support - You can buy protected Mobi books from any where in the world, so a great deal for us UK/European users, as Prices in US eBook stores are often 1/2 to 1/3 the UK prices, and with more book available. For your own books, Mobipocket creator is great and available for free. It does an excellent job of converting most formats, including Most PDF's.
Mobi also means that if in the future I shifted to a device which did not support Mobi, I could Format shift my purchased books as Mobi DRM has been cracked and I unlike Harry don't consider my eBook's as disposable entertainment
+ PDF Support - While it does not reflow, like the sony, I actually prefer it as the only files I usually leave in PDF are ones with graphical or strange layouts, which would render strange under Reflow.
+ Dictionary Lookup - I did not consider important when I got my (First) Cybook, but now can't really live without. Once you get used to the convenience, you don't really want to give it up.
Sony PRS 505
+ Menu Structure - The Menu structure and Interface in the Sony is more intuitive and easier to use. The ability to jump to book startinng with a certain letter can be a godsend, if you have hundreds of books on it.
+ Single Bookmark folder - Having a single location for bookmarks can be great, as you don't have to navigate to an individual book, the jump to a specific bookmark.
+ Landscape Mode - I like the Son's ability to switch to landscape mode at any time, and not just in PDF's like the Cybook. It can be really handy at times.
+ RTF support - If you have or plan to read a lot of documents, this makes it really easy as all Modern Word Processing programs allow you to save a document in RTF format, and you can just copy it onto the device without conversion.
+ PDF Reflow - If you have a lot of PDF's with mainly text which you want to read, without conversion, the Sony's PDF reflow can be nice. While it can result in some broken formatting, it can make reading them alot easier.
+ ePub support - As the new emerging standard, its nice to have it built in.
In the end it really depends on what your usage is going to be. If its mainly going to be for purchased eBook, I'll say go for the Cybook as you can get books from more sources, and support for a wide variety of devices.
If its mainly for your own documents, then the Sony may be a better option.