I have the upper end 21.5" iMac. You probably won't see a huge difference but it never hurts to have the extra internal hard drive space. A lot of people think it's a waste of money for the upper end 21.5" model but I don't think I wasted my money. Also, when I upgraded the internal memory to 12GB, I did see a difference in speed with every day tasks. While the applications themselves didn't run any faster, switching between applications and loading times were much quicker.
Lately I have been using Final Cut Pro and I must admit that it's nice having the extra speed for rendering.