Although most replies above explain most of it, here's my bit:
1. I've got the mid 2007 iMac 20" myself and the display is pretty bad. Besides it's a TN panel, all of the 20" displays then had some kind of brightness shift (bottom lighter than top), really annoying. I've seen the 2008 20" iMacs and i believe nothing had changed at that time. Now, i've heard that the 2009 20" iMacs finally got a better screen, an improved panel and no more brightness leakage / shifting and stuff. So chosing the 20" version is safe now. Still, i wouldn't do it, because the colors on the 24" screen just look SO much better, but that's personal in the end. Don't let the "24 inch is too big" thought influences you so much because after a few days using it, and then comparing it to a 20" screen, you will find the 20" screen being small.
2. Ah, the "mighty" mouse of Apple

First of all, i really like Apple products, but there is one product Apple has NEVER been capable to develop, a GOOD mouse. With ofcourse the worst mouse ever in mind, the puck mouse, the current mighty mouse is pretty good, but comparing it to even the cheapest mice of Logitech, it's junk. The design and the scrollball are nice, but that's were it stops. The buttons side buttons are worthless, because they're at a place where you normally hold the mouse in your hand, and when you move the mouse, you easily accidentily press one of those buttons. Furthermore, the scrollball gets dirty really fast, and you have to clean it every month or so when using it daily. Another thing is that my hand for some reason gets sweaty relatively fast when using the mighty mouse, a problem that doesn't occur when using Logitech mice. And last, but not least, from an ergonomic point of view the mighty mouse sucks, really. It's flat, but your hand is not. If you like to get RSI, use the mighty mouse.
3. Buy it now. Reasons to be found above. Nothing useful to add from my side.