I highly recommend looking at the trek 3000 and 4000 series bikes. They fit right into your budget, they are great on trails and will hold up to all the curb jumps you can handle, yet are perfectly acceptable on pavement with full gearing, and Trek builds a good bike and have never steered me wrong. I use my Trek 6700 (I had a bit more money to spend) for both purposes and simply can't complain.
No matter how you look at it, a mountain bike will be heavier and harder to move around the city than a road bike, but don't let people fool you into thinking that it's difficult - I'd much rather go a little slower on the pavement and have the option of doing trails (and the ability to find shortcuts through the city that a road bike can't handle). Plus, of course, they look cooler.