I have an 1.8 GHz "early 2006 iMac", which is the 32 bit Core Duo processor. I had replaced the hard drive a couple years ago with a newer one, which added some speed to the machine.
Physically, it has held up perfectly. I run SETI@Home almost every day, so CPU is at 100% for extended periods of time, but it stays cool and quiet. It is still pretty useable, but in the past six months or so I've noticed a slight lag when scrolling through web pages. Also, iLife '11 runs much more slowly than the previous version. iMovie is kind of a pain to use, and iPhoto takes a while to load in our 100+ GB of photos when launching it. In VMWare, Windows XP is slow but useable, but Windows 7 is frustratingly slow. But as far as just normal web / Word / iTunes / etc. use, it is still chugging along -- pretty good for a five year old entry-level iMac!