The Olympus E-500 is definitely a great camera. Most importantly, its low price compared to competing models makes it an excellent value. In absolute terms however, its image quality falls short of the best DLSR cameras. In particular, image noise is the E-500's biggest weakness.

What does make this camera stand out from other entry-level DSLR cameras is its extensive feature set which includes an almost unique supersonic wave sensor cleaning mechanism and in-camera conversion of RAW images.  Other unique features of the E-500 are its highlight-based and shadow-based spot metering modes.

The final important point to consider is the 4/3 system used by the Olympus E-500. There are now numerous lenses for this system but other lens-mounts still offer more choices.