a 1.3 A500 with 1meg upgrade and external floppy saw me through for years, but you may tire of having to load games from floppy disk all the time.
depends how much you use it i guess.
if you are going for it, then some form of hard disk upgrade. either that bolts on the side port, or clips into the CPU slot inside the machine (but you may need kickstart2-3 roms for the second option). then you can plug in some adapters to let you use a compact flash card as a hard disk. 4Gb is the limit for amigaOS without playing around with it too much. wich is more than enough for plenty of applications, and all the WHDLoad games you can think of.
WHDLoad? whats that? - its a program that takes floppy games, and allows you to have them installed, and run from hard disk. much quicker, and no more disk swapping! :-D
but bear in mind, that alot of WHDload modified games want one whole meg of chipram, so you may have to do the "cut and jumper" modification to your A500 to turn the 512k expansion in the trapdoor into chipram. more detail on that can be found or asked for as needed. also fastram will help as WHDLoad can "pre-cache" the game data there for instant midgame loading. helpfull for swapping scenes in adventure games for example.
obviously with a hard disk, having a full set of workbench disks would be good, and to be honest, the 3.1 upgrade and disks brings your machine upto spec so to speak. as you may find quite a few packages that are 2.x+ or 3.x+ only, and you won't loose much compatability with games either. WHDLoad helps with that as it can take into account more advanced processors, rom chips, and chipsets when it runs the game that may not like to work with anything more than an unexpanded A500
the easiest way to get your amiga and PC talking is with a serial null modem cable, and a copy of amiga explorer on the PC. the PC can then read/write to/from the amiga floppy disk, rom, and or hard disk if available.
there isn't an easy ethernet solution for the A500 at the moment, but a few of the folks here have some ideas in mind it seems.
there is a workable USB solution, using an A500 clockport adapter, and subwayUSB card, as i use USB flash keys to copy data to/from my A500. But that needs a hard disk for workbench and the device drivers, extra memory for the drivers to be loaded into, and a CPU accelerator to run it all. Unfortunatly, forget ethernet over USB for the A500 at the moment, as it just doesn't work that well at all. there is some kind of software/hardware issue. So untill those kinks are worked out, its faster to run a serial connection to a PC.
not sure about getting a cover for the side expansion slot, and not sure of retailers in Canada, but i'm sure some of the other peeps here can help :-)
--edit--
you might pay $50-$100 USD from ebay/amibay/craigslist for a GVP HD8+ expansion that bolts on the side, gives your amiga a hard disk, and 1-8Mb fast ram. you may then choose either a scsi hard disk, or with an Acard SCSI2IDE converter, either an IDE drive, or compact flash adapter and card. i paid $80 off ebay for a GVP HD8+ with a 52Mb (thats definatly meg) drive, with 4Mb ram, and a supra tubro 28Mhz accelerator.
not sure how much internal IDE hard disk adapters are going for, but they usually plug into the cpu slot. some even come with a compact flash socket on them these days! i shouldn't expect to pay more than $80 USD for one?