I believe all the new channels on the new satellite are MPEG4-encoded, and the older models won't decode those. So your old receiver will "work" (and indeed I still have a 505 in operation here), but it'll only get the same channels that it gets now.
Most, if not all new channels will be MPEG4-encoded, and a lot of existing channels will be converted or dropped. So eventually, the older receivers will become totally obsolete.
SD will offer you a new 600 receiver for $50, or a 630 PVR for, I believe, $250.