I'd definitely go for the iMac. Even if you already have the external display, as you can connect it to the iMac and use it as a second display.
Other reasons:
- The iMac's graphics processor and graphics memory are significantly faster.
- Faster HD and twice the capacity. The iMac's internal S-ATA bus is effectively two to three times faster than any external disk you can connect via FireWire or USB2. Even the default internal HDD is about 50% faster than any external HDD. As mentioned, the mini's internal disk is even slower than external HDDs.
- Keyboard/mouse, built-in iSight
- It looks better
As far as I know, the processor of both computers are somewhat upgradeable. It's not easy to take these machines apart, but the CPU is socket mounted and replaceable.