MacBook Air w/27" Monitor or iMac?

So I just bought a Macbook Air (11.6") and love it. I always intended on buying an external monitor for it for desk use, but when I started looking into it I couldn't believe how relatively inexpensive the iMacs are. For only a couple hundred more I could have a full computer. This, combined with the fact that the new iMacs have a display in connection so i could hook my MBA right up to it like an external monitor makes my decision a little harder to make.

Should I spend the $850 on a used 27" monitor or $1,250 on a used 27" iMac?

Well, if you buy the iMac, you could always use its HD for extra backups and/or storage. Plus you'd have the flexibility of using its cd/DVD drive, which is obviously absent on the Air. Just my two cents.
Congrats on getting the 11" Air. It really looks like a fantastic machine.

Not only that, but if you get the newest version of the iMac it HAS a plug-in to be used as a monitor. So you get both!