I'm starting to look at buying myself a road bike (currently riding a borrowed one). It needs to be able to handle commuting as well as longer, fast rides. I'm thinking of spending around 500 GB pounds (750 bucks). And so my question is:
2) Local Bike Shop
3) mail order all the parts from one of the big cheap places (I have lots of mechanical experience) and whack it together myself.
I'm most inclined towards 3 because I think it will be cheaper than 2 and that I'll be less likely to get ripped off than 1.
What sort of experience do you have with bicycle mechanics? Mail order is a viable option if you know how to assemble and maintain the bike, but you still need to make sure the frame fits by riding it, not just checking the mathematical correctness of the frame geometry.
Assuming you want a new bike, I'd buy the bike from an LBS, and buy your accesories mail order if the LBS can't offer you a good deal on them. The LBS will let you test ride the bikes, and provide a heap of guidance as to what sort of bike will suit your needs best. The tune-ups they offer and the after sales service is well worth the small amount of additional money. They may even be have some second hand bikes available to help you get a better bike for the money. If you buy soon, you should be able to get a great price on an '03 model.
eBay is a risky option for a second hand bike. Too often I've heard stories of people paying good money for a bike that has seen far more abusive use than advertised, thus needing significant money spent on it to bring it up to rideable condition.
Try to go for the LBS if you can. They will be your friend for the life of the bike, and longer. They might even have used or new-old bikes in stock for great prices.
Can you buy used bikes from your LBS in England?
In the USA, the local bike shops usually have good used bikes that they get on trade-in that you can buy for very reasonable prices. Often, the shops will offer warrantees and service on the used bikes they sell.
Option 3 is more fun, but you might be wrong on the fit which will cost quite a bit in the long run. Also option 3 is not cheaper then option 2. You can buy a complete bike cheaper then buying seperate components.
Evans Cycles in Waterloo Cut and Condor Cycles always have some nice used bikes.
London Cycling Campaign have a used bike page.
For mail order, sjscycles do a wide range of practical bikes in the "Thorn" range. Orbit are another good source of proper bikes.