Pros: Mac OS X (Face Time & Time Machine in particular are ace, ace, ace); fabulous screen; great performance; aesthetics and lack of desktop (of the physical variety) clutter.
Cons: Good range of ports, but they aren't so easy to access; experiencing problems with Skype videoconference from-Mac-to-PC (not a Mac issue, but annoying nonetheless).
Summary: The kid's Dell tower died. The kids never got on with Vista or with the Dell; it would continually develop allergies to various bits of hardware and party 3rd software and I was forever taking "tech support" calls whilst I was away from home. They love the iMac - and it just works out of the box. Even the base model is more than zippy enough for their (and my) requirements - in fact, my late 2008 Ally MacBook now feels positively pedestrian by comparison. Like a BMW, it's a little over-priced (and Apple really should include a virus scanner at this price point - since they don't, look at VirusBarrier from Intego); and like a BMW, you won't regret paying the extra for a moment. Highly recommended!
P.S.: If buying in the UK, go to John Lewis and take the extended warranty; an extra 60 quid gets you a 3-year guarantee, which compares pretty favourably with the cost of Apple Care (alright you don't get phone support from Apple, but honestly, I've never needed to use it anyway with any of the six products I now have from Apple).