I'm doing similar things on my Mini. I have the quad core server model. I have also owned the early 2011 MacBook Pro 13". It has the same guts as the $599 Mini. I ran the same stuff on that, and it did fine. (It also does fine on the 13" MBA I recently switched to)
Consider the following:
Based on your descriptions of your usage, the GPU in the mid-tier Mini is doing nothing for you, unless you'll be doing some gaming that wasn't mentioned.
I'd recommend taking the mid-tier option off the table. As consumers we often are drawn to the "Medium" choice. In this case it probably isn't worthwhile for you. You're essentially paying for a GPU that you don't need. You're paying for 4GB of RAM than are going in the garbage when you upgrade. The HDD is the same as the base model. The CPU does not deliver a dramatic performance increase over the base model. Is it better? Sure. Will you notice? No.
By choosing the base model, you save $200 up front. You can use that toward a bigger SSD (which you will find you need when you can't always keep all of the media you're working on on the same drive you're working from) and toward a 16GB RAM kit instead of 8GB. (Currently $95 on New Egg until 5/2). The extra RAM will come in handy when doing video.
Now, here's the case for the Server model:
You spend $200 more than the mid-tier, but get better performance.
You'll get a quad-core processor, which really does deliver a noticeable performance increase compared to the base model. You will take particular notice when doing heavy duty editing on images or graphics, rendering video, or converting video files.
You get two 7200 RPM HDD's. These are faster than the stock 5400 HDD's in the other models, and obviously double your storage. You can also BTO your Mini with 750GB HDD's for about $100. I have an SSD in my Mini server. It makes apps load a second or two faster and makes the system start up in 15 seconds instead of 30, but because I'm often pulling my media from an external USB drive or from the internal HDD, it generally doesn't make that much of a difference in speed. In a laptop, it's a great addition because it's more durable than a spinning disc drive. In the desktop, you really do sacrifice storage for a sometimes unnoticeable speed increase.
If I had it to do over again, I'd get the two 750GB HDD's and hold off on the SSD until prices drop further. The 7200RPM delivers adequate speed.
Which is best for you? That depends. If you don't see yourself doing any more video in the future than you do now, or doing lots of video conversion in Handbrake, quite honestly the base model will probably suit you fine.
If you do see those things changing, then you'll get more longevity from the server model. I'd forgo the SSD for now though and take the cheap upgrade in HDD space.
Then of course the other option is to see what comes out with Ivy Bridge. We may see an update to the Mini this year. If we do, the integrated graphics will improve considerably and may be worth the wait. Of course, we may also not see an update until next year. Apple doesn't seem to update the Mini as often as other machines.
