Become a MacRumors Supporter for $50/year with no ads, ability to filter front page stories, and private forums.
I'm in the same boat, wanting to update my 24" 2.16 core2 imac to a 27". What's held me back is the crappy graphics card. I'm hoping the next refresh is more palatable although I'm not expecting something current. The best we can expect is one generation old.
 
I've had my current iMac for several years now. It's running Mac OS X 10.4.11 with a 1.83 Ghz Intel Core Duo Processor and 512 MB of RAM. It's been freezing quite a bit as of late and I'm guessing it's just due to its age and the fact that it can't handle its commands. But should I tough it out a little bit longer for a potential iMac update at WWDC or should I just get a new one now? I don't want to be stuck with an obsolete model.

Unless, you are absolutely dying for a new mac, then no. It's not just the hardware that is due for an upgrade at WWDC. Apple has not updated iLIFE this year. iLIFE 2010 will be shown at WWDC 2010. WWDC has been always about iphone, imac, macbook pro and Mac OS. If you considering all this, then you would be silly to buy a new one right now.
 
My guess is:
- maybe minor speed bumps in the near term. I think this is unlikely, though.
- the big update will be ~October -- for the Christmas season.

I'd really try to avoid getting a C2D computer at this point. The Core i5/7 processors are really pretty nice.

OP, you will breath a lot of new life into your old iMac with a RAM upgrade. With only 512MB, there's a good chance those beach balls are due to VM swapping to/from disk. Even 1GB would make a huge difference.
 
Register on MacRumors! This sidebar will go away, and you'll see fewer ads.