Which is he best digital camera(price should be within 500$) ?

i would go for the cannon sd550 it recieved editors choice award from PCmag and i have one myself and the pictures are awesome you cant go wrong with this one.

I have had 3 dig cameras now. I currently use the Canon Rebel which is a graduate from the Fuji Finepix S3100. You may be able to get a used Rebel for under $500 but you will also need a lens. The Rebel series is a camera for a more advanced user. I am still learning the ins and outs.

My first dig cam was the Fuji FinePix. It comes w/ the software you need and the cables too. It has menus where you can modify the default settings for flash, lens speed etc. YOu can also choose between shooting w/ the LCD screen or the eye piece. I believe the Finepix is now a 4 mp or so camera which is more than adequate for the average photographer. You will be able to print pix up to 8X10 w/ nice quality.

I loved my Finepix, I just needed a more powerful camera and moved onto the Rebel. Canon also makes the Powershot series which may be of interest to you too. They have some pretty powerful menus and choices.

Good luck

Digital Camera Reviews - is the first place you can start with to do some research on this. But anyway you can also rely on magazines like Better Photography to get a good idea.
So before you decide on anything try to jote down the following points:
1) What kind of photographer you are? - amateur or serious professional
2) What kind of photography you want to do? - General or any specific field like Landscape/Fashion etc
3) Are you looking for a point and shoot or an SLR?
4) Your Budget - You cannot get a good digital SLR for $500

Ok my suggestions:
- Sony is a great brand for digital in terms of precision, clarity, ease of use and value for money.
- Sony W5/W7 are great options and are within 300$
- Sony W50 is a new one but stuffed with more power
- But before you decide on anything try the references i have pointed out here

dpreview.com is the best source on the net for digital camera's.