Similar situation to me. 5'6" and 200# when I got my bike. Wasn't sure what to get and ended up with a Fuji Absolute 4.0 for less than $500. It's listed on Fuji's site as a fitness bike and at the shop as a hybrid. Put some commuter tires and a rack on for back and forth to work and have ridden the heck out of it since the spring ( 1350 miles so far ). The only problem I've had is a broken spoke from going over one too many curbs. I would go to the LBS and give them your requirements of reliability, more upright seating, and $500 ( trust me, this way you have room to go up if you really see something nice ). If you feel comfortable with the shop they should get you into something nice. My biggest regret was not getting drop bars, the flat bars are hard on the hands.

I've been using the bike to get in shape and am down almost 40 pounds and riding 30+ miles/day 6 days/week.