iMac or Mac Mini for photography + existing Powerbook?

I came to the same conclusion. By the time you have upgraded the Mac mini to bring it nearer the iMac spec it has become quite expensive but is still a dual-core machine with limitations and you only have one display. Having two displays will certainly improve workflow, allowing one to be dedicated to the photo you are working on. The graphics card enables this in extended desktop mode. It also means that you have both a glossy and non-glossy screen - both useful for different applications. Lastly, rather than trying to accommodate one big 27" display, you can have a 21.5" display and a 24" display positioned independently to suit your particular situation.

The only reason I haven't proceeded with this solution is that we are now in the iMac pre-upgrade period (will it be April, May or later?). If it's later I shall kick myself for not going for it first as last.