So I just came back from the Sonystyle store here in Canada to see the 505 and the 700 up close and personal. The 700 is not as bad as some folks on these forums are making it out to be. Are there contrast differences between the two? Absolutely. Is the 700 perfect? No, but it's absolutely worth consideration. If I didn't know any better about the 505, I would think that the 700 is a great device on its own.
I don't own an ereader device yet but for the improved pdf handling, internal lighting, and faster processor I think the 700 is worth it.
EDIT 04/13/09: I'm embarrassed to say but I bought the PRS-700 on 04/11/09 and was unhappy with the muted contrast. (It sure looked better in the bright store). I just brought it back to the store and exchanged for the PRS-505. Not only did I save $100 but I think I'm a lot happier with the improved contrast. As hypocritical as I might sound, it really is a lot better and my apologies to those that I doubted with their review of the PRS-700.