The i5 chip is far superior to the core2duo. Multi threaded cores, don't forget for 64 bit processing on 4 virtual cores. Added ram would do you good in either situation; 8GB never leaves me lacking memory in anything I've done yet. Of course if you get the mini you'll have to factor in the price of a decent display, and the lack of a dedicated graphics card (again I do not miss this and am not a computer gamer)... but your original question refers to the better "computer." That is the 2011 mini hands down.
It really depends what you're doing with it, but really for the home user, either machine will be fine (and both are 64-bit; they may have meant that the virtual cores are 64-bit in the above quote, but it can definitely be read as saying the iMac isn't--also, I heartily agree with the 8gb comment, I've never needed more other than in my workstation editing HD video). The pros and cons:
iMac:
slightly more upgradeable (larger/more HDD options, mostly, though you can hack in a second drive or eSata port; not sure is RAM is maxed for that model but 12gb is plenty)
All in one means less wasted space and is very good if you don't already have a monitor
Optical drive for dvds/cds
Prettier
FAR superior GPU, but really only relevant to video editing, powering super large displays, or high end gaming
Mac Mini:
FAR more energy efficient
Newer technology/more "future proof"
Thunderbolt, which is currently still all but useless, but is allegedly going to be like SCSI on steroids and coke at the same time
Small, lightweight, non-obtrusive, and kind of cool looking
Also in the "future proof" realm, a mini will make a great home media server when you eventually replace it (13W at idle, it's kind of ideal for the task), the iMac will likely collect dust at that point (unless you have kids)
HDD Is upgradeable, and you CAN add a second with a cable (sold separately), but you are limited to 2.5" form factor, which is fine if you want SSDs but annoying in every other way, as 2.5" platter drives have a much higher failure rate than 3.5" and anything about 500-600gb is prohibitively expensive currently, so not great if you have an extensive media library.
For uses, if you are using it for web surfing/netflix watching/email/light photo and such, both will work perfectly well. For processor intensive tasks, I'd likely go with the mini, but ONLY if the apps make use of virtual cores. The Core 2 duo will actually handle single threaded apps a bit better. If you're going to be running processor-heavy tasks in the background while using, go with the mini. If you're likely to be doing one thing at a time, go with the iMac. Either one should meet all your needs (personally I'd go with the mini as I already have all the peripherals I need, but if I didn't I'd probably buy the iMac...).