Well, the iMac uses the Core 2 Duo's mobile variant, "Merom" but many of the same things apply to the big desktop version not currently used by apple, "Conroe".
Basically,
*Woodcrest has a much faster FSB- 1333MT/s (1.33GHz) versus Merom- 667MT/S (667MHz)
*Woodcrest (and some versions of Merom) have a larger L2 Cache- 4MB- versus the lower end Meroms (2MB). In your price range, this is probably not so much of a factor
*Woodcrest has a higher TDP- 65W (2.0 and 2.66GHz) or 80W (3.0GHz) per chip versus Merom (31 max)
*Woodcrest supports multiprocessor configurations- only one dual-core Merom can be used at once on the same computer, while Woodcrest supports two.
*Woodcrest supports Quad-Channel memory with 256-bit something or other. Merom only handles dual-channel.
Basically, the C2D will do a lot, but if your apps are sufficiently multithreaded and you have enough RAM (2GB bare minimum, preferably 4+) the Woodcrests in the Mac Pro will eat it for breakfast.