The Mini, yeah, definitely an improvement. 1GB in the low end is cheesy, though - the new onboard graphics use 128MB in a 1GB config or 256MB in a 2GB setup. 2GB should really be the minimum. But an improved bus (1066MHz bus to dual-channel DDR3 1066) will help performance. At DDR3 SODIMM prices, though, I think you're better off letting Apple upgrade the RAM for $50. I think it would hold its own against $650 Dell/HP SFF boxes, though.
Actually...I just put together a Dell Studio Hybrid. It starts with a 1MB Pentium Dual-Core chip, 2GB of RAM, and a 160GB hard drive which starts at $450. Compared to a $650 mini (with 2GB of RAM), you have to upgrade the CPU to a 2GHz Core2 ($100 extra) and Vista Home Premium ($30) to get the same features. That brings you up to $580. Is an extra 1MB L2 cache, bluetooth, wifi N, FW800, and GeForce 9400M vs GMA X4500 forht $70? To me it is. And that's before we ever talk about software. I personally don't care about the Dell's keyboard or mouse because I have my own preferred models. I could have jacked up the Mini's price to get a KB/Mouse, and I could have jacked up the Studio Hybrid's price to get wifi/bluetooth - though personally I'd want wifi to go with my wireless router. Plus the mini has 5 USB ports, and is dual-display capable now (for $30 more if you dont' have a Mini DP monitor. Since it's not included on the Dell, I'm not including that in teh setup).
The GeForce 9400M is slower than the Radeon 2400, though...what you're going to see is that the base iMac has much slower graphics, if such a thing is possible, and only about 11% more CPU speed.
I do not understand what I do. For what I want to do, I do not do. But what I hate, I do.