Don't get a PPC Mac for iPhone development.  Although it seems to work currently Apple doesn't support it and future versions of the SDK may simply not work on a PPC Mac. 
Pretty much any Intel Mac with 2G or more of RAM will be fine as an iPhone development machine.  A bigger HD will be better but even an 80Gig HD should be OK.  You can add a big external HD for $100 later if you need it.
Cheapest will probably be a used or refurbished Mac Mini.  Also look at any Intel iMac or Intel MacBook.  Something like a used or refurbished 17" iMac will be a reasonable development machine.