Honestly, if I was just looking for a gun to punch holes in a paper target I would consider a .22 rimfire. The Ruger MkIII and the Browning Buckmark are the two most often mentioned and probably the best choices for less than $500. The Browning may be a bit better out of the box but the Ruger is probably easier to improve due to extensive aftermarket support.
If I had to have a centerfire pistol I'd probably look at either a good 1911 or a Browning Hi-Power. Both are generally pretty accurate and amenable to being made more so by a knowledgable smith. They are going to cost significantly more, both gun and ammo, than a .22 will but if you can afford it (or if you reload) the will make excellent choices.