What lens should I use for product photography with an Olympus E-500?

The 50mm macro on a four thirds camera will pretty much do anything you need to do in terms of product photography—unless those products are true nanotechnology or inscribed grains of rice (where you'd need to actually resolve detail that the 50 won't manage on an 8MP sensor) or something like a school bus (where the 50 would probably be too long).

For things that are very small, you'll probably have more pixels than you know what to do with in the final use case, so cropping is very much an option if half-life-size on the sensor isn't quite big enough (particularly if you're shooting for the web). The chances are, though, that you won't need to get that close, even for detail shots, but being able to focus somewhat more closely than a standard lens can manage is a good thing.

The 100mm 35mm equivalent focal length is a very good one in terms of background management as well. That's not just about controlling depth of field; it also includes things like how big an artificial backdrop needs to be in order to cover the frame, which in turn influences the ease of lighting the background (or blocking light from it, for that matter).

Light will be important, especially given that your E-500 is of a vintage that was less than great in low-light settings. (That's not a knock on the camera—nobody was doing a very good job at, say, ISO 1600 at the time. Today, that's just another setting on most cameras.) That's where the narrower field of view of something like the 50 pays off in a big way. Lighting the product is relatively easy, but if the background area gets large, then it becomes a lot more difficult to light it evenly and unobtrusively.