While I agree that the G4s were "stretched out", I find these "5-7 times faster" type claims a tad cheesy, because these are not talking about _everything_, and different users have different areas where they expect better performance of newer hardware. There are a _lot_ of variables in a good notebook - CPU speed is only one of them. Not _everything_ in a MacBook is 5 times faster than a PowerBook G4, so at _least_ a "your mileage may vary" should be added to such a claim.
So let's talk about the apps you've listed...
iLife - mainly iPhoto & iMovie ... Those really are much faster on a MacBook C2D compared to your PB G4. Same for iTunes/Quicktime encoding.
Toast - Encoding video (all legal) ... If you have (or will buy) a newer version of Toast (version 8 was released recently), this task will definitely be faster.
MS Word/Excel ... Since Office is not yet universal, the Rosetta-thing applies. This needs RAM, simply put. The apps are perfectly useable. With very large documents, you might see a performance decrease in some areas. Either way: Get the 2 GB of RAM.
Safari & Mail.app run natively. They're good.
Watching video in VLC/iDVD ... I guess you mean DVD Player, not iDVD. DVD Player is good on intel Macs, for VLC, I'd get the nightly binaries, although some of them are more "crashy" than others. We're all looking forward to the final version of 0.90.
MSN Messenger ... The original works "fine", like on your PB G4 I mean. Might want to try Adium as an alternative.