So, would you say it was a worthwhile £40 ($65) saving over the i3 (if I were to get
this)? Or would the i3 hold it's resale value enough to warrant getting the newer model now?
<opens link>Hmm. The only pounds I'm unfortunately familiar with are those on my bathroom scale.
<opens usd to gbp converter>
Good God, you guys are getting screwed over there on mac prices!

The new entry level 21.5 costs $500 more than the states!
Over here, the paltry apple discount for discontinued models and the much better capabilities of the 2011 series make the 2010s a poor value.
It's almost a wash concerning the two models you're contemplating. One has a hard drive twice as big, the other a marginally faster processor and ram. Both have the same video card, etc. Ehh....
If storage space isn't a pressing problem for you (ie, you've not got a lot of stuff to store or already have external drives), go for the i3. It's slightly faster, has a newer architecture, and should run a bit cooler than the c2d's. In the confined space of the imac, heat can be a concern. Hypothetically, a cooler machine should last a little longer and/or have fewer problems than a warmer one.
An option for us former colonials is to buy a used model for a greater discount from a private party, with the proviso that it either has, or is eligible for, extended applecare coverage. And with an iMac especially, you're going to want the coverage.
Hope that helps.
I'm trying to deal with the cognitive dissonance of a southerner helping a Brit out online in the middle of the Independence Day weekend.