Hybrid Bike Advice

Well, Diamondback Edgewood '05, 21 speed model is very, very nice, and you could buy two of them with that budget. The 24 speed models were slower on my test rides. Don't know why.

Reason to use hybrid is comfort? City? Commuting?
Well, I hope so. Here goes. . .

It is quite a sprinter and holds a nice rate of speed on flat ground--faster than the mountain bikes, except about the same as an XC racer. Not as fast as a road racing bike on flat ground. You could install an inexpensive wide range rear cassette/freewheel that has an additional 11 tooth gear to get even faster speeds if you like. This is all still far under your budget. Yet, such a lovely, fast ride.

The inexpensive little Diamondback is a unique creation. Flat ground speeds are less than a road bike, while up hill speeds and sprints are much faster. The combination is ideal for city use and possibly useful for touring, because attachment points are provided. It is equipped with reasonable high gears, while the low gears are so far beyond 1 to 1 that you can climb UP gravel mountain fire roads while being divinely comfortable the entire time. No kidding.

How about REI's Novara Fusion? That's a car-free touring bike, also a hybrid, but European style with all conveniences and features built into a maintenance-free light weight setup that includes hub powered headlights, Shimano Nexus 8 (their fastest gearhub and zero maintenance), and mountain ready rear brake that also does not require maintenance. That'll do in your budget nicely. But, it can carry a lot of stuff with pannier bags and it does not use gasoline. 😉

On the REI Novara Fusion, gear range is 300%, and it is any 300% that you want.
This is easily adjustable between classic road bike range or classic mountain bike range (both 300%). If you live in or tour in the mountains, you may purchase a larger $4 Nexus rear sprocket (aebike.com, harriscyclery.com) and an $14 Shimano 7 speed chain (because its longer now). Installation requires only a screwdriver, an economy chain tool, and the Nexus 8 directions from Shimano's web page. And, up the mountains, you go. 😉

For a very light weight and fast-moving sensation, try Schwinn's flat bar road bike $375. It is not a hybrid, but it does have more comfort and real metal forks added to a road bike. I found it extremely pleasant. Although it sprints exactly as a road bike (not too exciting in the city), it does change gears faster and easier. On level ground, I was unable to discover exactly how fast it would go, but it was certainly into the performance range. I would use premium Ruffy Tuffy tires on it instead of the bargain tires it comes with in order to gain more speed and more comfort simultaneously. The larger sizes of this bike are divine comfort. Touring attachment points are provided. This is the only one of my suggestions that has the lightweight nature and racing heritage enough to stay with a "roadie" pack on group rides.

Regardless of any other difference, the hybrids with more narrow wheels are closer to a racing bike. This provides for less effort required to propel it.

In the hybrid class, the 7 and 8 speed aluminum cruisers should not be overlooked. While carring cheaper components than the Diamondback Edgwood 05, the Schwinn, Electra, and Raliegh cruisers with lightweight frames and plenty of gears are fantastic comfort and great fun for urban use. And, don't you want great fun?
Typhoon cord tires can be safely run at pressures of 60 back and 40 front for enhanced speeds because the Schwinn product comes with hooked freeride rims. However the Electra cannot have such pressures without a rim and tire change. More appropriate, slightly less stylish, handlebars are available. I use Dimension 24" cruiser bars ($12 aebike.com harriscyclery.com) with an inch cut off from the ends. This defeats the wind, but keeps the comfort and style intact. In all three cases, these may be further outfitted with Kalloy micro adjust alloy seat posts (clamp doesn't slip), Kool Stop MTB brakes (doesn't eat rims), handlebar mount water bottle holders, Deore (or TX70) derailleurs, Shimano 7 speed chains, inexpensive 11-34 freewheels (much higher speed), and a high quality shift cable--for incredible performance range with no compromise to comfort or fun. An inexpensive, smaller size front chainring will easily adapt the bike to mountain touring or San Francisco hills. These bikes are end-user servicable. You may grease the hubs and bottom bracket with axle grease, a cone wrench, and ordinary hand tools. Freeride rims with a large depth make any flat fixing into a ten minute job.
This type of bike is worth considering if you will be roaming about in the city all day long. Test drive to find out.