I think I'd go for the G4 as well, but a few points to consider:
-though the Radeon 9200 is pretty nice, the 800 mhz CPU probably can't really feed it --> you're not going to get that much more out of it than you would a lesser card because the processor simply can't keep up.
-the G3 might even be faster for some games because of the higher clockspeed. Most (all?) games aren't going to use altivec.
-the ibook 900 G3 performed rather well against the Rev. A powerbook 12" except where altivec mattered (partly because the the G3 had twice the cache of the G4, as it still does compared to it's G4 ibook cousin.)
So why would I pick the G4? Here's why:
-airport extreme instead of airport
-internal bluetooth option
-slot loading drive
-usb 2.0
-G4. I know what I just said above, but apps and the OS are using altivec more and more as time goes on. With the iapps, and even the finder, altivec is going to make a difference. Certainly with FCP or photoshop. A CPU without altivec is the past... altivec is not only heavily relied upon now, but will be more so in the future.
of course, it's not my money we're talking about, so you have to decide how much that extra cost means to you. I used to have an ibook 900, and it's a very nice machine, no doubt. But long term, I think you'll be happier with the G4.