I build gaming machines on the side, and IMHO a single ATI 4850 is an entry level video card, along with the Nvidia 9800 GTX+/GTS 250. Yes you can play games at lower quality settings, but once you have seen the difference a good graphics card can deliver, you won't want to look at the crappy graphics.
The Blizzard games you mentioned may be DX10/11 games (Blizzard hasn't confirmed, but that is the skinny). While the Nvidia 9400 is DX10 compliant, good luck getting all the eye candy out of it. The newer version of Direct X takes serious GPU horsepower to run well.
The good news is that my new mac mini ran a humble 1900 on 3dmark, which should give it the power to chew through the older games you listed with ease. If you can have two machines, txnoob's advise sounds good. Wait until the new Blizzard games come out, and get a cheap Windows box, $750 to $1000 should cover it. Until then, get a new Mac Mini; I really like mine (I did upgrade the hard drive, the one it came with was anemic).
If you can't or don't want two boxes, and have the cash, upgrade to the iMac with a 4850. Besides, the size difference between the 20" and 24" is huge. The 24" is so worth it.