I upgraded from a dual 1.8Ghz G5 powermac to a new 24" iMac with Dual 2.4Ghz and 4GB memory and a 750GB hard drive. I actually bought the memory from OWC and saved about $500. Apple memory is way overpriced. I am very happy with it -- the screen is really big and beautiful and it is a very fast and reliable machine (in my opinion). Some people do need desktop/tower machines because they need to add PCI cards (e.g. extra video cards for more screens, extra firewire and USB ports, external SATA controllers, audio and/or video IO cards, etc. You can't add any cards to an iMac. But, if what you need is covered by what an iMac has, then you definitely don't need a tower.

It is always the case that they may come out with a new model at any time; however, you could also consider buying a used mac. If money is a really big issue for you, you may be able to find a deal on craigslist. Just be careful -- there is also fraud out there. Don't pay for anything you can't watch boot up and operate in person and take home with you. Or, you can buy a refurbished iMac from Apple. There was a thread recently in the OS X tribe where people chimed in that they have been very happy with their refurbs -- they save money and get machines that appear to be new.

Whatever you get, get applecare for it. Don't even question it -- just get it. All modern computers, from any manufacturer and running any operating system are highly complex and somewhat fragile devices. Applecare give you a three year guarantee that your mac will run fine or be repaired free, and it gives you free phone support to help you through whatever problems may come your way.