I sold my latest-generation iBook 12" 1.33GHz, combo drive, 1.5GB RAM, airport, and 40GB HDD for $500 when I purchased my Intel iMac. The iBook was in perfect shape, and I felt $500 was a fair price considering I purchased it new with the listed specs and paid only $950 (no tax, no shipping).
Do not purchase such a dated machine for more than half the cost of a future Intel iBook. If you can't afford a new machine, wait for a seller who doesn't need to milk his buyer for every penny.