First of all, I will say that I am a Mac user, but what I am about to say is my honest, and as-close-to unbiased opinion I can give.
The current
iMacs are, for what they are, rather good. Certainly an improvement on the previous range. They are however still built around laptop internals (mobile version of the processor, and graphics card) and as such will not perform as well as PCs available for the same price for some things (well, mainly just gaming actually). They also run rather warm, if not warmer than the MacBook Pro, when under stress or in already warm environments.
Whichever size you are looking at, whether it be the smaller or the larger model, I'd advise you to upgrade the processor to an i7. This cannot be upgraded later, and so buying faster now will make the computer last longer in the long run. RAM can be upgraded later at a much, much cheaper price.
One thing I will say about the new iMac is I really, really do not like the glossy screen. It probably wouldn't be so bad so long as it's not got a light shining directly onto it, but there are quite a few companies now selling stick-on antiglare covers who must be used to people with my complaint.
Oh, and don't get the magic mouse. Get the trackpad. The magic mouse is THE most uncomfortable mouse in the world!
OS X Lion is also a really nice update to the OS X family. I mean, it'll never be as good as Tiger was, but in comparison with Leopard, which I'm pretty happy to admit was Apple's "Vista", Lion is spectacular. The new Mission Control (which replaces Spaces and Exposé) is rather slick, and the ability to just shove full-screen things away onto another virtual screen with a flick of your fingers on the trackpad is rather swish.
Anyway, I know it's just opinion, but I hope I've been of some help tonight.