I don't understand why everyone thinks i3 is the thing for imacs? That's a seriously low end cpu, taking the place of celerons. The only reason it's occasionally an improvement is that the C2D is almost antique.
I've gotten a C2D iMac when it just came out. At the time it was a really good cpu. I'd really like to upgrade, but don't want a 27" screen. If Apple does something as stupid as not giving an i5 option for the smaller iMac (really it should be i5 default with a quadcore option) I'll be upgrading to something else.
i3 would be the biggest update in low-end since introduction of C2D. It's still ~20% faster. i5 is same as i3 but with Turbo and higher clock. Quad core can't be used in 21.5" due heat.