Yes, Vista is the new XP, available any minute now. It comes in different versions with different price tags; Home Premium is the version which will suit most home users.
Have a browse around sites like Dell, Evesham, Scan, Novatech, Mesh. See what you could get for your £500 now. Since you don't need the monitor etc, you should get a decent base unit for that. Then make your final choice when Vista arrives.
I'd recommend a Core 2 Duo processor, 1gb of memory, (you appear to be confusing memory with hard disk size in your post), a 250 GB or bigger hard drive, two optical drives (DVD-ROM amd a DVD writer) and a decent graphics card. How good a graphics card you choose depends on whether you plan to play very recent game titles, and it will also be affected by your budget.