Thanks for your suggestion, hellhammer and aki. I did look into the mini, however, I am passing on my PC and monitor, so I would need a new monitor too. Getting a mini and a 24" Apple Display would be great as far as screen goes, but cost wise it would be closer to $1300+ even if I go for refurbished. At that price, I think a mini+24" display is a better choice than a upgraded iMac 21.5" for my use, however, I would still be looking at upgrading mini or even screen---to 27"---in the future.
A 27" iMac i5 or i7 would be ideal for my space and use, it is way over my budget right now, but it is my target. I think no matter what I get for $1000-$1400 now, I will be thinking about upgrading to one in the future. I wonder between iMac 21.5" and min+display, which would hold value better in about a year? I kind of guess a basic iMac, starting at a lower price, would be easier to sell and have less drop in value in about a year.