The Olympus SP-500 appears to be an update to their popular C-770 and C-765 cameras. I have not seen any reviews of the SP-500 yet.
Image stabilization adds about $75 to $100 to the cost of a camera.
People who have image stabilization seem to be pleased with it. It does help prevent blurred photos when shooting above 3X zoom. Can you live without image stabilzation? ... yes.
The Sony H1 is in the same class as the Canon S2.
Some of the reviewers say that the image stabilizations of the Sony is not as good as the Canon.
...
..
.
Looked at both last night (Olympus and Canon). Both seem to be great cameras. High optical zoom on both. But the Canon seems to have the slight edge with the image stabilization feature (nice when using high zoom) and slightly better movie specs. But the Canon also comes with a much higher price tag...about $450 compared to $380 for the SP-500. Is the Canon worth the extra $$? Is the image stabilization really worth it? And how does the Sony DSC-H1 stack up?

Chowhound
Comic Vine
GameFAQs
GameSpot
Giant Bomb
TechRepublic