Still quite usable, but I agree, wait. It's not exactly speedy at the moment, as what is happening is the iMac is having to 'virtualise' (basically simulate) another processor which can run Photoshop. When Photoshop CS3 (the next version) is released, it will scream by.
Go ahead with the iMac though, you'd love it. Just don't buy Photoshop until they release the new version.
The actual iMac itself is just about the best computer you can get for design. The built in display is fantastic, better than most LCD TVs. OS X's colour profiling is MILES ahead of what you get in Windows, OS X is much better at handling images/shifting images around and you will find there's more decent software out there for Macs than there is for Windows.
Go for it, if you're new to Macs, you will NEVER look back!