Thanks for the replies, all!
@tfdesign Yes, the CoreDuo- just before they introduced the Core2Duo. So it's a 32bit machine that maxed out at 2GB RAM, enough for me to upgrade her to Snow Leopard last year, but she's cut off from upgrading to Lion. You're right, any machine I buy will see a dramatic performance increase over her existing machine.
I'm going to take it for granted that I want to get the $1999 iMac that comes with the Radeon6970M with 1GB graphics memory, since all the other iMacs only have 512MB graphics cards, and the processor is capped at 2.7GHz.
So here are the options available for customization, I guess more than anything I'm looking for a sense as to which of these things will be worth the upgrade-
$200 to go from 3.1GHz Core i5 to 3.4GHz Core i7
$100 to bump the graphics memory from 1GB to 2GB
$210 to go from 4GB to 8GB RAM (which I know I can buy cheaper elsewhere)
Thanks again everyone.