My opinion is save your money and go with the SB350, so long as you do not need the other SB500 features. Some providers of HD content use a copy protection system that prevents the retransmission of content on the HDMI port, so all you see is a scrambled picture. Thats why SB recommend connectinog both the HDMI and Component ports on the SB500. Whenever you are watching via the HDMI port and the program content is copy protected, you can immediately change settings and view via the Component ports.
Do a quick search of "HDMI" on the SB support site and you will see the articls that explain this issue.