If you could stretch your budget to $650 there are a couple of very good 21" monitors I could recommend. But every one I've seen at $500 or less (for a new monitor) had serious image quality problems. Fuzzy text, poor color seperation and tone, and below average brightness are the most common in cheap 21" monitors. And because they are bigger the problems are that much more obvious.
For under $500 you can get a high-quality used 21" through a reputable dealer on eBay, but be leary of any deals that sound too good to be true. Sellers know that a Sony F520, Viewsonic P225F or Mitsubishi 2060u in near-new condition can easily pull $500-600 on eBay, and they price them accordingly. If someone is offering one for $300 or less, there is either something wrong with it or the seller is running a scam.
Your safest bet would be to buy a new, high-quality 19" monitor. This is really the sweet spot in the monitor market right now. You can pick from the best 19" on the market for less than $400, and the picture quality is every bit as good as a 21" that costs twice as much. The picture quality also makes it easy to run games at up to 1600x1200.
Among the 19" on the market now, I like the Sony G420S and Mitsubishi Diamond Pro 930, and my favorite is the Viewsonic P95F+, which you can get at Newegg for under $300 including shipping.
BHD