The mac mini has really become a lot more attractive thanks to having a decent GPU the same as the950£ iMac. Unfortunately they are both shared memory chips which is not ideal if you want to game at all.
The only main difference performance wise is the hard drive. The 5400rpm is slowish however if you didn't care about it in your iBook you won't care about it in your mini.
There are decent monitors for 150£ on the 20-24" size but you probably will be giving up the integrated web camera. Also I find the aluminium apple keyboard REALLY good and if you don't care about the numerical keys the small BT one that comes with the iMac is gorgeous. I found the Magic mouse good not great(certainly Apple's best mouse but that does not say much as their previous ones were horrible).
So if you go for the Apple keyboard/mouse thing you are looking for 225-250 on top of the mini including new monitor. The difference then becomes about 200. For the hard drive speed and flexibility, the camera and the total aesthetics of the package I'd spend the extra 200£. But that is just me.