Which iMac and which TouchSmart?
The TouchSmart uses a 23" TFT panel with touch capabilities. The iMac a 21.5 or 27" IPS... That is really all I need to know, the IPS is far superior in my books.
Other than that they come with come with AMD mobility GPUs, the TouchSmart using a 6550m and the iMac varies between the 6750m and 6970m, the TouchSmart with 2GB of Video RAM.
Both use various Sandy Bridge processors, both have 4 x DDR3 so-dimm slots. The higher end TouchSmart models come with a BD burner, the others just a normal DVD super multi.
And so on.
For me given the options I'd go the iMac personally, I think there is enough there to warrant better value for money.