I think you should first decide whether you want a desktop or a laptop.
A 10" screen is very small. If you're going to carry a laptop around with you then a 10" screen means you'll have a small and light computer.
On the other hand if you're only going to use it at home there's no need to limit yourself to a 10" screen.
If I was buying a new PC I would certainly get one with Windows Vista, preferably with Windows Vista Premium.
For your �500 budget you can a desktop PC with really good specifications:
http://www.comet.co.uk/shopcomet/product/49000 8/ACER-ASP-M3640-3GB/tab/specification
This has Intel's best processor (quad core), a very big hard drive (640 GB), 3GB RAM, Windows Vista Home Premium, and a 19" widescreen monitor. It also has plenty of USB ports for plugging in your Ipod, camera, USB stick etc. - 4 on the back and 4 handily located on the front. Then it has slots for camera cards. All for �499.
Speakers are not included.