Some guy here said that when he was in Apple Store looking at the 24" 2.66 and playing with it and it was sluggish. He tried to watch some HD film at full screen and it was choppy, not smooth as it should.
4GB should be enough, while you don't do very hardcore tasks. If you want the best go for 2.93 with GT120 or GT130
As far as I know - HD playback is nothing to do with the GPU, it is all about the CPU.