iMovie sounds like exactly what you need, and you should already have it installed on your iMac.
If you have the newest version (iMovie '08), and if you find that's not advanced enough for you (or if you're system isn't powerful enough to run it), then you can download the previous version - iMovie '06 (v6.0.4) - for free from the Apple website (search these forums to find the link).
iMovie '06 is more powerful than '08 and is less system-hungry, but '08 is supposed to be easier to use.
You really don't need to go out and buy anything.
SL