The answer really depends on what you want the money for, and when you will need to access it. You're right that you can't have a CTF and a Junior ISA (although there is a consultation on whether a CTF can be turned into a JISA). So your current options are something like:
Savings account - Easy access, but poor interest (below inflation) Fixed rate savings - Slightly better rates, money tied up. CTF - depends on what you've got, but no access until 18. NS&I Childrens Bonus Bonds - Tend to be quite poor performing. 2.5%, tied up for 5 years. However, they are tax free, so they can make some sense if you're hitting the £100/yr interest problem. Share based investments - better long term bet, but you'll need more than £500 really. Stakeholder Pension - for the really far-out planner! No access until 55, but tax relief.
In your position, I'd probably stay with cash, but make sure I'm getting a reasonable rate. The current best buys (according to savings champion) are: