Thinking about upgrading and need some advice

I currently have a 2007 20" iMac Core 2 Duo that I bought new 5 years ago. I have upgraded the RAM to the maximum 4GB. It's been a great machine, but I would like to do some more upgrades to it, which isn't the easiest thing to do on an iMac. I'd like to replace my tired HDD and swap in a SSD, but I'm not really comfortable with opening up a perfectly fine iMac and risk screwing something up. I've been looking at the Mac Pro's and they seem easily upgradable in just about every aspect. Plus they hold up to 4 storage drives internally. Also I like to do video work and graphic design. So I'm debating on either getting a Mac Pro and selling my iMac. Or upgrading my iMac to an SSD and running externals. Now if I go with the Mac Pro, I've been looking at used ones on eBay. Which model date of the Mac Pro should I consider. No older than a 2008 or 2009?

For what you like to do, the Mac Pro would certainly be a sensible way to go. I definitely wouldn't consider anything older than a 2008 at this point. I'm sure a 2008 would suit you well enough, though you may as well go with a 2009 if the price is right. Of course what's in one vs. the other, such as amount of RAM, the GPU, storage, etc, will need to be taken into consideration.

I think I'm just going to upgrade my iMac for now and get an SSD. But I have a few concerns. Do you think a 120GB SSD will be enough for Lion and Apps? Currently I only have the stock 500GB HD with only about 180GB in use. I would purchase a large external for videos, music, and photos if I get the SSD. Is it safe to have an external HD running all the time? In a way it seems to defeat the purpose of upgrading to an internal SSD if I have a noisy external HD always running and spinning up and down. I heard the smaller portable drives are quieter, so maybe I could just get one of those and hide it behind my iMac with one of those backpack shelves. Any advice? Thanks.

If you get an SSD that small, you will have to offload a lot of stuff. It probably would be OK, but you won't know until you try it. You should size up how much of your 180 GB used now can be offloaded to an external drive.

As for external drives… they can be noisy. I have a Seagate GoFlex and while I have tuned it out, the noise is noticeable when I think about it. I'm definitely planning on being rid of it in the near future. If you don't need the read/write speeds to be as fast as possible, then you can consider external kits that use laptop drives @ 5400 rpm. A big advantage to these is that you can also power them over USB/Firewire and not need a power cable. OWC carries a couple. They have one that actually puts two in one case so you have a RAID stripe for some extra speed and space. I'm planning to get one of those myself at some point, though I can't attest to the noise levels yet.
Bus-Powered Portable RAID FireWire 800/400, USB2, eSATA - OWC Mercury Elite Pro mini Portable RAID

EDIT: The dual-drive model I linked to is only bus-powered over Firewire, it seems. Their single-drive models can be powered over USB or Firewire.

I got a 240GB SSD from OWC. I formatted it and used carbon copy cloner to reinstall all of my files. To do that I used a SATA to USB cable to connect the SSD externally. I restarted the iMac and tried to test it by attempting to boot from it by holding down the option key and sure enough it appears as an option to boot from at startup, BUT it took forever. I am hoping it's just because it's connected via USB which caused the slow speed at startup and shutdown? I assume when I install it inside my iMac via the internal SATA cable it will be as fast as its supposed to be. Am I right about this?

Maybe. OWC doesn't recommend cloning HDD to SSD, so that could be one issue with your slowness.

I erased the drive and reformatted it again. I did a clean install of Lion and everything seems to be good. During the initial restart I noticed everything on the screen appeared slightly bigger and magnified compared to what it was on my HDD. I went into system preferences and checked the display resolution and its 1680x1050 - the same and default size as it always was for my 20" iMac. Any ideas on why its like this or how I can fix it? By the way I'm still running the SSD externally off the USB-SATA cable. I didn't install it inside yet so would that have anything to do with it? Thanks

Somehow, you have accidentally turned on the screen magnification. You can turn that off under Universal Access, Seeing, Zoom.