But I'd need a USB mouse and a monitor as well and it all totes up. I can if I need to but if there's another option, I'd rather take it.
The Mac mini can work with both DVI and VGA monitors. A VGA adaptor is included (and has been with all models so far).
As for your PS/2 keyboard and mouse, I would suggest a PS/2 to USB converter. Several units are available at monoprice.com:
2274,
173,
2083,
3707
Please note that I have not tested any of the converters listed above. I did use something similar back when I got my Mac mini G4, and the converter I used had a problem: you could not hold a key (to repeat) and then press another key (the repeating key would get cancelled by the new key pressed). If that makes any sense, let's just say it made playing some games impossible with the keyboard. Other than that, it worked great.
Are you sure, however, that your mouse is only PS/2? Some older mouses had a PS/2 connector but were also USB compatible with the use of a
simple adapter. Of course if you do buy a PS/2 converter you would be wasting a USB port and require such an adapter too, but I was just mentioning it in case you go the USB keyboard route. Just make sure your PS/2 mouse is also USB compatible before connecting such an adapter (monoprice Product ID 2209).
P.S.: No I don't work for monoprice, but I recently ordered a few items from them and I'm just a satisfied customer. No to mention that their prices are extremely good.
Also, about going "last gen" vs "new gen", be aware that the nVidia 9400M in the new models is way, way better than the intel GMA950 in the previous models. And with Snow Leopard, the upcoming Mac OS X version, being able to take advantage of GPUs, I would opt for a refurb of a new model instead of buying a last-gen model. I won't even mention recent/upcoming games, where the GMA950 isn't even a viable option (ex: Starcraft II, Diablo III). And since you can't upgrade the GPU in any Macs except for the Mac Pro, better buy the latest Mac mini IMHO.