Not everyone knows how to properly use social media to their advantage and end up in front of their target audience, so from that vantage point, press releases are still quite a viable option.
What you will pay for a press release really depends on what you're touting, what you want to achieve, how newsworthy your release is, its appeal to your audience and, of course, your budget. As far as cost goes, there's everything from free to a few hundred dollars per release (or more). As a rule, with the companies I've worked with and our PR people, we've spent a few hundred dollars for reasonably b road distribution across the U.S. and been quite happy with the ROI. I never used any of the free services, so I can't really add any input there.
Also, with links to your site in the release, you'll drive traffic from readers clicking, as well as get some SEO value with the backlinks.
Every social media channel has unique selling points. For example StumbleUpon and Facebook as social media offer distinctive benefits. Any budget on press release must have considered the target audience and expected goals. You mentioned $500, what about the mission to be accomplished?