Yeah, you aren't going to get a small laptop with a GPU for that low of a price. However, you could look at laptops with integrated Radeon HD 3200 or Geforce 9300 or 9200 or whatever the equivalent is. My friend has a laptop with the 3200 and he can play TF2 pretty well at medium or high settings. I think HP might have one.
Here, this is 15.4" but it's $500 and has the HD 3200 as its base spec.
http://www.shopping.hp.com/webapp/shopp ... v5z_series
You can upgrade to a 3450 which is slightly better but I think based on the same GPU as the 3200. For light gaming, either would be fine.
Oh, here's a 14" one with the 3200.
http://www.shopping.hp.com/webapp/shopp ... v4z_series