The bank is chase by the way, not sure if it applies to everyone or just someone who just purchased a new house (my case).
I don't have an ethical problem with it, after all we're talking about switching from one big bank to another. I'm pretty sure I'm going to do it, $500 would be nice, I just don't want to complicate things, so I think it would be easier to just close the existing one and make the few calls required to change account settings for auto payments and direct deposit.
If I tell them that I'm closing my account and they ask me why, i tell them about the offer, I wonder if they would match it or something, that would be cool too.