The 8500 is an excellent card from what I've heard. It has much more mature drivers and is not "all potential, no substance" anymore. However, the Ti500 is a more consistent scorer for highest framerates in all games, and in a wider variety of games. For example, the GF3 Ti500 and Radeon 8500 are usually at most 5-10% in speed in different in games (sometimes one wins, sometimes the other), but many games (especially in Windows 2000 and XP, which I run) run slower on the 8500 than they do on for it Windows 98. The GeForce 3 Ti series show pretty much no difference in any game's FPS in Win 98/2000/XP/
Also, read @ Anandtech that the Radeon 8500 @ 1024X768X32 res runs @ 75 fps in Unreal Tournament (my favourite game), whereas the GF3 Ti runs it at 130. Serious Sam also goes way down in FPS with the new drivers for the Radeon.
If you play only newer games, the difference is a lot smaller usually, but UT is one of my most played games.
Basically, for the future, they appear to be more or less even, with the 8500 having slightly better 2D output and the GF3 potentially having more mature drivers, as they update them more often (fact).
I currently own a Radeon 32MB DDR which I like a lot, and just got a GeForce 3 Ti200 for my new comp. In my opinion the 8500 and GF3Ti500 are pretty much evenly met, and I'd recommend either one.