Although replaced by the 400D, the Canon 350D is still an excellent option worth considering and you can grab this + kit lens for £373.35 at the moment
A new Nikon D50 with its respective kit lens is also available at a similar price.
Comparisons between the 350D/D50 are widespread and the general consensus was that they were mostly on par in a lot of tests but the D50 was widely regarded as having superior handling. This of course is entirely subjective as I've got rather small hands and have no issues with either camera.
Remember though, you are buying into a system. You will lust after new lenses and can either be conservative or spend a fortune on glass and accessories.
Bear in mind that you will need a memory card, will probably want a bag at some point, then there's a tripod, then possibly a filter, lens cloth, rocket blower, card reader etc etc.... It all adds up!
Personally, for £500 I'd go for a 350D at the price above with the kit lens then spend a wee bit extra on a memory card & bag and then put the remaining budget towards another lens like the Sigma 70-300mm f/4-5.6 APO DG Macro if you feel you'll be shooting sports/wildlife etc.