Is the $20 the 2.5"? I guess it depends on what you are going to use it for. I have the different sizes for the different projects....but to answer your question, yes it is worth it. A lot of people say they rarely use a larger size.
I have just looked these two styles up, and it probably true that the difference in price is due to the fact that the cheaper one is the 500 and the more expensive one is the 510. I think the biggest difference between them is that the 500 can only make stickers with permanent and repositionable cartridges, while the 510 can use laminate and magnet making cartridges also. In addition, the 500 has a dial for turning while the 510 has a crank for feeding materials through. The crank is probably at least slightly better to grip. And it used to be true that one of the Xyron machines did not have a built-in cutting blade. I am not certain whether this was the 500 or not.
Also, I thought I would point out that the cartridges indeed do not appear to be the same for the two machines but do seem to be fairly comparable in price. I don't know how easily the 500 cartridges can be found in local stores though. I have seen the 510 cartridges in my local shops.
I have a version of the 510. I do like it and use it fairly frequently. It works very nicely for its purposes. I don't use the laminate feature often and have never used the magnet maker. If those two purposes aren't important to you, then it might not be necessary to spend the extra money.
I have the $20 one from WM the other 5 inch one is called a creation station I think. So if you get the one that's $20 don't make a mistake and get the wrong refill like I did. They do not use the same refills.
I use the laminating cartridge several times. I scan in a newspaper article so I have it digital and then run it through the xyron to laminate and preserve it in the scrapbooks. I have one of my daughter's lacrosse team and she keeps taking the original to show people. At least it won't get ruined and if it does, I have it digially.