I'd get the 14" iBook. If your current iBook is good enough for you, then a new 14" iBook will fit your needs nicely. Plus, it's faster, so even if your needs and computer activities change and become more advanced, a new system will be up for the job. 🙂
And since the 12" iBook has the same resolution as the 14" iBook, the extra 2" of screen size on the 14" iBook will act to make onscreen text and graphics appear larger, which is what you're after. There's no point getting a larger screen with a higher resolution, as everything will appear just as small as before. Again, you're aiming for text and things to appear larger, and the 14" is guaranteed to do that.
In terms of functionality, the iBook is also probably better for your needs. Both will do a good job with what you need them for (word processing and internet), but the 14" iBook has a much much better battery life. So there aren't any performance drawbacks for your activities, onscreen text will put less strain on the eyes, and battery life is much longer for travelling. 🙂
If you need Bluetooth (or BT 2.0, which is probably coming out soon for the PB), widescreen display, FW800, and want the aluminium casing, then sure, pay the extra money, but if I were you, I'd spend some more money on RAM, and pocket the rest of your savings. 🙂