MiniDV was a great format, but it's time has more or less passed now. It always had weaknesses (4:1:1 colorspace compression in NTSC, reliance on tapes), but it served as an in-between from VHS/VHS-C/8mm to digital, for many consumers. In fact, we don't have much faith in tapes at all anymore, and consider HDV to be a self-defeating format. Again, it has a number of drawbacks (resolution cheats, reliance on tape).
Solid-state is the future, so your thinking that a camera that "records to memory" is pretty well spot-on.
You can choose between internal hard drives, or solid-state cards such as P2 (professional, expensive) or SD/SDHC (consumer, inexpensive). Sony uses it's proprietary MemoryStick/MemoryDuo storage for solid-state.
In my opinion -- and the opinion of many fellow videographers, editors and even mainstream video-industry magazines -- you only have two choices at the sub-$1,000 (consumer) level: Canon or Sony.
These days, you're looking at HD-resolution cameras, which shoot at a full 1920x1080. The solid-state "flash memory" cameras mostly shoot to AVCHD format.
- NOTE: Forget the Blu-Ray nonsense (a format that is essentially dying on the vine), don't get caught in the trap of "oh now I'll have to make Blu-Ray discs". Poppycock. Just do like everybody did in the 1980s, plug your camera into the television when you want to watch.
- If you're wanting to edit these into some nifty custom videos, then feel free to edit an HD version master edit (Adobe Premiere Pro or Sony Vegas are suggested). Save one exported version to HD-res H.264 and view on a computer connected to the television. This is the future, HTPC, not Blu-Ray -- people are tired of discs, they want downloads and large drives full of shows/movies/videos. Save a down-converted version to DVD if you want a disc to share. Even a decent cheap laptop with a remote control (to plug into the television) is cheaper than the hardware and software required to both create AND play Blu-Ray discs.
One nifty feature of both the Canon and Sony cameras, should you ever want to get more advanced, is that various thord-party add-ons, as well as custom online instructions for rough DIY projects, allow a person to mount 35mm SLR lenses, such as Nikkor ED or Canon L glass lenses, to the front of the camera. That essentialy gives it a professional grade of glass and options on an otherwise inexpensive consumer camera. Very nice!
There are several Canon cameras available right now. Which one you pick is almost more of preference and exact budget:
Sony models are not being listed, because the price-point of those are higher than the Canon options, and those are already pushing your budget up $50-100 more than the $500 you stated ($550-600 for a Canon). As with most other Sony products, you're mostly paying for the name. A good product, but possibly overpriced compared to the competition.
I also want to mention that it's smart to buy a video camera to shoot video. Some P&S cameras do decent VHS-like quality, and the newer Nikon D90 and Canon 5D MkII make nice short HD clips -- but neither are acceptable for more serious videos.
I strongly suggest looking at these cameras in a local store like Best Buy -- just don't buy it there. Especially don't waste your money on the "extended warranties" as cameras from Canon and Sony already come with great manufacturer warranties. After you preview in-store, shop smart, and buy online. Online you'll get the best price, get free shipping, get a tax-free purchase -- let Best Buy make a profit from some other unsuspecting sucker.
Amazon.com most likely has the best prices. Once you decide which camera you're after, please use our affiliate links above (it's the same price for you, but Amazon gives us credit for the sale)
or contact us for another link, just reply to this post, should you decide on a different camera model. Note that we affiliate with them because of their great reputation, service and prices.
I personally would like to buy a Canon Vixia camera, or maybe a Sony, but just don't have a budget for it right now. Maybe later this year. I've only gotten to test them, play with them, and read constant glowing reviews in various video and tech trade pubs.