Well, firstly the entry level 500D isn't exactly in the same class as the higher-end K7 but as you can see from the pricing, the K7 offers value for money. If the lens range of the Pentax can satisfy your needs, then go for the K7.
Otherwise the Kx (which would be more appropriately compared against the 500D) offers choice of more colours (white, red, blue and black) better noise performance at high ISO, is smaller in size, has build-in CCD stabiliser and compatible with practically all pentax k-mount and m42 lens ever built. Plus there is a dual lens promotion now !
Its so small and compact too...and you get to use a REAL pancake lens like the DA40mm ;p