I just got an update and it says its only for the new imacs

[togermano]

Does anyone know what bug fixes it does?

This update provides important bug fixes and is recommended for 20-inch and 24-inch iMac models with 2.0, 2.4, or 2.8GHz processors.

ohh i guess its video card drivers if you read the user coments http://www.tuaw.com/2007/09/14/imac-software-update-1-1/

 

[s e 7 e n]

Apparently, it fixes the anisotropic shading (which was disabled). See http://www.barefeats.com/imacal5.html for more details (and a benchmark comparing it to v1.0)

 

[Luap]

Read all about it here:
https://forums.macrumors.com/threads/354729/
But in short, its little better than it was before the update. Indeed, for many its even worse.