Some A500 software wont run on the A1200 but chusing "Original" under "Display Options" in early startup menu will get some things running and use a Kickstart degraders such as ReloKick, Tude or the like will make most stuff run. On the other hand the A1200 have a sh*tload of stuff the A500 won't handle.
As far as sound is concerned I think they are alike.
The A500 have a 50W PSU where's the A1200 have a 23W or 25W one, this is just barely enough for a stock machine but uppgrades (even simply adding a few external floppydrive) will eventually kill of the original PSU.
The A1200 with stock OS3.x WB will read PC DD floppys. Apart from that it have a 16bit PCMCIA port that there's an abondant amount of old Ethernet cards available for and then you can network the A1200 with the PC.
The HD is a standard 2.5" IDE HDD and as such you can get a new drive for it even today though the original OS3.0/3.1 will only handle 4GB without special software. If upgrading to OS3.5/3.9 you can go for much bigger drives (100GB is no problem).
The A1200 comes stock with 2MB of Chipmem and have no standard socket for Fastram. One can use the PCMCIA port for upgrade up to 4MB fast memory but as this is only 16bit it's slow. If you need more memory there's quite alot of memory/CPU cards on the market that will let you upgrade the memory amount. Suggested upgrade is a 030 CPU card with 32MB memory.
The yellow port is composit and the brown connector is a RF connector so there's no need for an external FR Modulator such as the 520 in order to connect to a TV. Videoport to Scart cable us usually cheap and gives a better picture on the TV but for best performance a real Amiga monitor such as the 1084S is needed and these monitors are quite regulary available on ebay and the like and therefor also quite cheap.
