Although a lot of people on the forums complain about the 9400 in the iMacs, I for one think it is a perfectly good card for a large number of people.
The number of people who use their computers for the purposes you listed outweighs the number of people who need high performance graphics quite significantly. There is no need for someone who is using their computer for internet, Word, and iLife type uses to have a Radeon 4850. It is overkill, and the 9400 will suit this consumer band very comfortably. It is also a better card than the Radeon 2400 that was in the previous low end iMac. Despite the 2400 being a dedicated graphics card, it wasn't very good and in most tasks, the 9400 will outperform it.
I purchased a unibody MacBook Pro in December, and it is only rarely that I switch the 9600 on. I got the MacBook Pro because I do audio work and wanted the bigger screen and firewire for working in Logic so the graphics processor doesn't mean much to me in general. I do occasionally play some games, but in general the 9400 handles them pretty smoothly. WOW is fine on the 9400 - framerates rarely drop below 30 (which is where I have them capped so I don't know exactly how high they go), and when playing Quake 4 I usually get between 25-40 frames per second.
My mother has an original Core Duo MacBook, and it does all the things you have listed without any problems. The iMac is a FAR more powerful machine than that with the 9400.
I think in general people just want something to bitch about 😛