It seems like you either don't know much about computers or you have a real hard-on against the Core Duo.
Here's a similarly-equipped Dell machine:
http://configure.us.dell.com/dellstore/config.aspx?c=us&cs=19&l=en&oc=DXPS400F1&s=dhs#logicerror
$1059. 17" screen, STOCK 512 RAM, ATI X16 card, 160 GB harddrive...
And it comes with a Pentium D. A Pentium D that I wouldn't touch if given the option of a Core Duo in its place.
And that's not even bringing up the nice form factor in the Mac...
So for an additional $250, you get a better chip with the iMac and a vastly superior form factor... I'll take it.