Thank you for calling that to my intention. When I went to Apple Store the default data showed - for the 1TB: $499.

For small home use the 500GB @ $299 - does sound great: way better bargain than an Airport Extreme. Why ever buy one of those now?

You can get an Airport Extreme for $179 and a 500GB USB external on Newegg for $60, the combination of which would provide all the features of a Time Capsule for $239. Granted you have to deal with two devices and a decreased throughput to the disk, but for casual use it may be enough for some people.

(you can also get 1TB externals on Newegg starting at $95, for a total of $274, a significantly lower price than the $499 1TB Time Capsule)

Are you sure it will be compatible with time machine?

Yes, they are compatible. I have a 500GB drive hooked up to my AirPort extreme right now and it's recognized to work with TimeMachine.

Unfortunately I need to run my network in mixed mode, 2.4ghz Wireless N so transfers are much slower.

I believe so. Just make sure that the Airport Extreme is running at least version 7.3.1 of the firmware. I personally use an Extreme and a WD MyBook as my backup solution and while I wouldn't say it's fast I've never had issues where it wouldn't work.

see also: http://www.engadget.com/2008/03/19/time-machine-now-works-wi...