My choice would be to upgrade the PowerMac G4, or simply keep it the way it is, as long as everything's fine. After all, think about this - you can upgrade the processor up to 2 GHz, or dual 1.8 GHz, so even Leopard will run on this old machines without too many problems.
Now, what about those new iMacs? Well... here's the catch - Apple added new CPUs and GPUs to the iMac line on the 28th of April, 2008, and a lot happened in the industry since then. While rumors about quad core iMacs emerged in late 2008, Macworld 2009 was silent. When I say "silent," I think about the fact they didn't say anything about the new iMac, of course. The reason?
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Heh, I think the new iMacs were headed this way, in fact, only that they were planning to make them without the FireWire ports. As you surely know, the MacBook Unibody without FireWire create a lot of noise. And it wasn't positive karma coming with it...
...so my guess is this: wait a little, Apple is working on adding back to the iMac what they shouldn't have removed in first place: the FireWire ports! Other than that, remains to be seen, but if you see "upgrade PowerMac G4 Sawtooth, or buy new iMac," I strongly suggest you to get some juice into that old beauty, it can still rock for a year or two!