Mac Mini :: New MM And Self Upgrades - Freelance Weekend Graphic Designer

I need a bit of advice from you kind folk!

I thinking of buying the new mac mini 2GHz �499 model (which I can get student discount), and carry out the upgrades myself to save myself some money. I was thinking of getting a imac, but as you all no the new base rate model is a lot more expensive than previous models, and maybe over my budget.

I would upgrade the hardrive to a 320GB western digital (cost �55), upgrade the memory to 4GB (cost �52).

I already have a apple pro mouse and keyboard.

I wanted to use my spare lcd 26"tv as a monitor, but have been told it will be terrible, so I also need a monitor and was looking at this one:

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Couple of questions about this setup:
1) Will this monitor be better quality than the new 20" imac screen?
2) I work on cs3 to do some freelance in my spare time at weekends - indesign, editing in photoshop, and e.g. vector logos in illustrator etc to design flyers, banners etc. I will need all the cs3 programs open along with itunes and neoffice. Would this upgraded mini run well on it with this kind of multi tasking? I don't do any 3D editing.
3) Will the minus 0.66Ghz less processor compared to the new imac be that noticeable for the work I do?
4) The pros beat the cons as far as I can see -
This mini setup can save me �180 over the basic new imac.
Gives me a bigger screen, + maybe better.
2GB more memory.
Can use the 120GB replaced hard drive as a new external with a caddy
It's Lacking 0.66GHz in processor speed compared to the imac