The one aspect that hasn't really been discussed here is price. If the OP can purchase a 5 year-old iMac (presumably in good working condition)…for a good/fair price (Mac2Sell says a 2.4ghz C2D 20" iMac is worth about $400)….then it's a situation of "You get what you pay for."
The older it is..the less it is worth…and possibly the less "useful life" it has remaining (in terms of being able to accomplish the average computer users daily tasks in 2012+). Of course that same $400 could be put towards a brand new Mac-Mini ($599 new...or less refurbished).
I'm certainly a "fan" of older used computers!

The OP needs to carefully evaluate their situation (financial & current/future computing needs)…and decide if the $$$ spent on a 5 year-old computer now will seem well spent (versus spending a bit more $$$ now…and getting something newer).
The OP certainly doesn't want to spend $400 now…then in 1-2 years realize that this 5 year-old computer just isn't cutting it…then spending another $400-$600 on another used computer ($800-$1000 total)…which also may only be useful for another 1-2 years (of course some of this money can be recouped by selling the previous computer).
- Nick