Haha wanna know what is funny? I had an iBook G3 700 and I added the hitachi 7200rpm drive. Disk performance was GREAT with it. But that's DISK PERFORMANCE which is hardly indicative of computer performance.
I'm right now on a 1.2 ghz G4 iBook, and despite the the harddrive runs at just over half the RPM of my last one, it's a much speedier system. I don't see how the costs would be the same... but if they were, the new computer is a far better deal. You'll get things like BT, a 32mb graphics card, USB 2.0, slot loading drive, etc etc.
So basically, from 100% personal experience, the harddrive is a great upgrade. I have an 80gb stock 4200 rpm drive in here right now (laaaaaaame) and as soon as the 7200 rpm 100gb drives start popping out, i'm going to make the swap right away. That being said, the hard drive doesn't perform miracles like doubling the speed of your processor or turning a G3 into a G4. It just improves disk performance. This can improve system performance cuz OS X OFTEN caches to the disk. Having a lot of RAM limits this, but doesn't prevent it, so when OS X caches, the faster drive helps. App boot up quicker as well, and the system start up time was cut in half...
-Kevin