I'm thinking of buying Olympus EVOLT E-500 8M, what to look for?

I'd highly recommend the Nikon http://www.dpreview.com/reviews/nikond50/ if you're looking at an Entry Level camera. I was a beginner into DSLR when I bought the D70 (the D50 is an improved design, with some of the features "tuned down" for beginners), and it has been a WONDERFUL experience. I'm not a fan of olympus, however I haven't used any of their higher-end cameras. I wouldn't go with the entry level Rebels (other than the XT, which I've heard improved IMMENSELY). You can buy the D50, and when you want to move up, you just buy a new body... all of the lenses will move with you (unlike Canon Lenses, which seem to have different mounts at each price point). Buy the entry level body with a nice fast lens, and you'll be VERY happy.

One piece of good advice that I have read many times when people ask about which DSLR to buy - Go to the store and try holding the cameras and playing with the buttons. I went and tried this when I was trying to decide between the D50 and the Rebel XT; I didn't like the feel of the XT, but the D50 felt like it was made for my hands.

I'd have to side with those advocating for Canon or Nikon, as teece mentioned you are ideally buying into a system. And what's the point of upgrading to a nice DSLR and dramatically limiting yourself as far as lenses go? I can not speak to the Rebel, but I did buy a D20 awhile back and I love it. Having said that, Nikon is also very good. Stick with the entry level model on those two and you'll be happy, AND be able to have a wide range to upgrade the body to in the future without worrying about needing a whole slew of new lenses.

...oh, there was a but. The E500 is a good camera, a very good camera capable of taking excellent images, but like the Canon, it too has a tiny viewfinder. I'd toss a coin for the D50 or the E500. I went for the E500.

The E500 is a good camera. I'd recommend it over the D50 and certainly over the Canon Digital Rebel. Whilst the kit lens in excellent, bear in mind that Olympus has adopted the 4:3 system for the camera and as such you're not going to find many second hand/budget lenses for the system. Though as a plus, this system has been specifically designed for digital photography. The kit lens itself (worth going for the 14.5 - 85mm rather than the 17.5) is alot better than what comes with the Canon. As far as prosumer vs professional features, there aren't really any 'critical' features that are missed in the prosumers versions rather that professional cameras have the edge in professional situation; tougher design, better buffering, faster writing, less gimmicky etc... etc... The E500 certainly feels tougher than its competitors but is a little slow on write times.

I don't know if Canon has different lens mounts. Yeah, they have two: EF (works on any camera) and EF-S (short backfocus, only works on cameras with APS-C size sensors because they have smaller mirrors, allowing the back of the lens to protrude further into the camera). Since trying to use an EF-S lens on a full-frame camera would actually damage it (the mirror would smack into the back of the lens), the EF-S lenses have a slightly different mount, designed to keep them from mounting on full-frame cameras. An EF-S camera can take both EF and EF-S lenses, but not vice versa. All of Canon's EF lenses cover a full 35mm frame of film; only their EF-S lenses are limited to APS-C. However, some third-party lenses are available in EF mount that only cover APS-C. Some people advise against buying EF-S lenses since you won't be able to use them on the full-frame camera you eventually buy. However, the cost of a sensor is dependent on its physical size; I bet the prices of full-frame silicon won't fall as much as people think. So APS-C DSLRs will be around for a long time, and therefore EF-S lenses will continue to be in demand. Canon's 10-20mm wide-angle zoom and their new 60mm macro are both EF-S lenses and apparently quite nice. EF-S by no means denotes an inferior quality lens.

teece: ah. I had read that they would not work with 35mm cameras. My apologies for the misleading info.

aubilenon, there's is no Nikon DX lens mount. All modern Nikon's use a Nikon F mount. DX lenses are made to cover a DX sensor, which is smaller than a 35mm film frame, and will thus give some vignetting (at some focal lengths, depending on the lens), when mounted on a 35mm film camera. But the DX lenses mount and function fine on any Nikon F mount camera -- there aren't two different mounts. They're just F mount lenses that aren't designed to cover a 35mm frame. I don't know if Canon has different lens mounts. There's a guy on Flickr than regularly uses his DX lens (I forget which) on his F100 35mm film camera, because he likes the (relatively minor) vignetting that he gets.

If that's your budget, I'd highly recommend the Canon Digital Rebel XT, as others have. It's an excellent prosumer camera, is compatible with the full line of Canon lenses (though with a 1.6x crop factor as described by aubilenon) and performs at a much higher level than any "entry level" film camera I've ever used. http://fsearch.fatwallet.com/results.php?PHPSESSID=9e5be4ade1973cd5800042b7a2f0cb09, so it's a good time to buy. Investing in Nikon or Canon is a good move due to their dominance in the D-SLR market, the wide range of http://www.fredmiranda.com/reviews/index.php and the fact that you'll be able to take those lenses along with you from camera to camera if you decide to scale up or upgrade. These two brands are your "don't mess around" choices, and given your budget and the falling prices, it's an easy choice to make.