As a professional photographer and studio owner who has used Macs for many years for Photoshop editing and all misc business and personal computing needs I wanted to chime in.
I have been using iMacs, MacBooks, and for the last few months, a MacPro 2.8GHz dual-quad (8-core) with 8GB of RAM and a bevy of 1TB Seagate Barracuda drives. The MacPro has been used with the NEC 24" 2490WUXI (H-IPS panel) and HP LP2465 (PVA panel).
I just bought a MacMini, received ysterday. Bought the base model (1GB RAM and 120GB HDD) but with 2.26GHz processor. I popped it open, installed 4GB of RAM and a 7200RPM 320GB 16MB cache Hitachi internal drive.
The new MacMini performs so closely to my MacPro that I would recommend going with the new MacMini and a high end 24" monitor with a matte screen The two 24" monitors mentioned above are great choices at about $550 for the HP and $1000 for the NEC. The matte screen is the most "realistic" match to printed output which is what you need if your final product is printed output. Also the glare is insignificant with the matte screen. The most serious imaging pros who edit for printed output typically choose matte screens for a good reason.
By purchasing the Mini and a separate monitor, either can be upgraded, swapped around, whatever with no impact on the other.
I have three older white 20" iMacs with 2GHz CoreDuo processors and H-IPS screens. They're fantastic machines with superb monitors and performed Photoshop editing wonderfully in their day, but their older processors and limited to 2GB RAM make them uncompetitive with the latest machines. I wish I could easily upgrade their processors and RAM because the screens are magnificent, but that's the problem with iMacs... your screen and your brain are tied up together. You got a problem with either the screen or the brains and the whole machine is down. Can't upgrade either without replacing the whole thing.
If I were you I'd buy the new base model MacMini, but with 2.26GHz processor, max it out with 4GB, upgrade the internal HDD to 320GB or 500GB, buy a high quality 24" panel, and two external 1TB drives (one for your image files and the other as a TimeMachine). The new Mini has a fast bus, fast RAM, excellent graphics processor, and FW800 which is awesome! Use the internal drive for system and apps only. Connect the externals with the FW800 interface. This will give you an incredibly versatile and flexible system with excellent capability for a moderate amount of money.