There are many good reasons to put a notebook CPU on a desktop. The main benefit is quiet operation. My new 20-inch iMac Core Duo runs as quiet as any notebook would, even with 7200 rpm spinning. In addition, notebook-grade CPU permits smaller desktop chassis. And there's the obvious energy saving.
Now, if you are looking for no compromise power user's desktop computer, notebook CPU may strike as an odd choice. But iMac isn't such a computer.