A wise man once told me...
Never size a computer for today's needs. Always size a computer for one's expected usage in 3 years. Thus, the computer will last its full 4-5 year life cycle. If one sizes for today, they will be selling / replacing it within 2-3 years.
To me, your friend is a very wise man. re: Do get the i5 - which is a good size for your "computer needs" in 3 years time.
And if were me, I'd buy the i5. I5 because more and more apps are taking more advanced of multi-processing. In 2-3 years, even more apps will take even more advantage of it.
Even in 5 years, you probably won't need "advanced multiprocessing" to load web pages and do some light photo editing.
The C2D is fine.
Real life story: I have the the entry level 17 in, 1.83Ghz Core Duo iMac from 2006. 4½ years later, it still runs fast enough to keep frustration at bay. At the time of purchase, I thought I would have to replace it within 3½ years.
I can watch HD video and work in photoshop with reasonably sized files (under 200MB). Launching most apps takes 1-4 bounces, exposé is smooth with over 18 windows (didn't bother to test more), etc.
I'm thinking of buying a new iMac, but every reason for upgrading is unrelated to the processor:
-My 160GB drive is pretty cramped. You can buy a new iMac with 2TB drive today.
-I want a bigger screen
-I'd like to install more RAM, but I'm limited to 2GB by design. You can add up to 16GB in the current iMac, plenty for at least 5 years.