The 500 is the ultimate in nostalgia for a lot of people, but it's a lot harder to "do stuff" with it, compared to a 1200.
A 1200 is much easier to get software unto, get a hard drive set up on etc.
You also get the 2 megs RAM by default, and AGA.
THat being said, if the purpose is "what I had as a kid", then go with that
